Africa Energy & Infrastructure magazine

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CONTENT 17

COVER

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BRIGHT TIMES AHEAD: AFRICA’S INNOVATION, FINANCE, AND RENEWABLES LEADING THE WAY

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NIGERIAN CONTENT DEVELOPMENT BOARD, DIALOGUES WITH AEI ON DEVELOPMENTS IN NIGERIA’S OIL INDUSTRY

56 NOT ORDINARY, EXTRAORDINARY.

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OIL RIG IN THE YARD AT APAPA, PORT OF LAGOS, NIGERIA.

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GUINEA CONAKRY COMMITS TO INCREASING UPSTREAM AND DOWNSTREAM ACTIVITIES WINNERS AND LOSERS IN THE ENERGY TRANSITION

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THE POLITICS OF ELIGIBLE CUSTOMER IN THE POWER SECTOR AEI, SIGNS MOU WITH ASSOCHAM, TO PROMOTE MULTI-LATERAL INVESTMENT

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THE PROSPECT OF EASIER INTRA-AFRICA TRADE IS BOOSTING INVESTMENTS IN TRANSPORT AND LOGISTICS www.africaenergyandinfrastructure.com | 3

AFRICA ENERGY & INFRASTRUCTURE A Publication ef African Organisation CORPORATE HEADQUARTERS Portsmouth Technopole, Kingston Crescent, Portsmouth PO2 8FA, United Kingdom +44 23 0265 8276, info@africaenergyandinfrastructure.com KEN GIAMI Publisher & Chairman Publisher@africanleadership.co.uk KINGSLEY OKEKE Group Managing Editor editor@africanleadership.co.uk ARVY K. NAHAR Director – Energy Operations arvy@africanleadership.co.uk BERNICE BENJY Group Head, Finance & Administration JEHOSHAPHAT OGUJIUBA Head of Operations and Special Services WOFAI SAMUEL Associate Editor wofai@africanleadership.co. uk MERESIA ALOO East Africa Correspondent JANET ABENA QUAINOO Ghana Correspondent IZU SAMUEL Head Client Services izu@africanleadership.co.uk IFE ADE TOKAN Editor - At - Large While great care has been taken in the receipt and handling of materials, production and accuracy of content in the magazine, the publishers will not accept any omissions, which may occur. The publishers would like to thank all those companies and individuals who took part in the magazine and wish them every success.

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PUBLISHER’S DESK

committed leaders to manage the unprecedented times that COVID-19 represented. Such leaders move society forward, become positive references for what is possible, help promote self-sufficiency and inspire a generation of upcoming leaders to aim to solve some of humanity’s biggest problems. They are the true stakeholders in the Africa project.

They are the worthy partners of progress for Africa’s future. It is for this kind of leader that we have put together the African Leadership Council (ALC) African Leadership Council is therefore founded on the hope to mobilize the critical mass required to galvanize multidimensional change at various levels of leadership in the continent.

It is indeed possible to live in an Africa, where the continent is not only solving most if not all of her problems, but contributing her optimal value to the global system, earning the respect of all sections of society, and leading the world in several respects.

WELCOME TO THE COUNCIL

JOIN ALC TODAY

Dr. Ken Giami, Chairman, African Leadership Organization

F

rom the stables of the African Leadership Organization- publishers of Africa Energy and Infrastructure magazine and other leading pan-African titles, I am happy to announce the official launch of the African Leadership Council, a global leadership coalition for enabling excellence, achievement, and development in Africa.

The council’s formation is centered on the premise that celebrating outstanding achievement and leadership is good for humanity, and especially good for Africa as it has the potential to create a ripple effect in society by inspiring others to aspire to serve humanity for the greater good of all.

The council shall, among other things focus on enabling top African achievers and corporate leaders to create more prosperity for stakeholders of the Africa project. These African achievers

are already heavily invested in making a difference on the continent through their toils, sweat and blood. They had choices to do other things, but they chose to contribute their quota by exemplifying leadership and achievement. Each of them has their stories to tell, tales that are written with the rigors of arduous work, pain, and discomfort, as most successes anywhere in the world require – for no pain, no gain. These leaders were job creators, wealth generators and servant-leaders who even when unrecognized and uncelebrated still forged forward in helping their communities move forward.

When the coronavirus pandemic, arrived in late December 2019, snowballing into unprecedented proportions with impacts to every aspect of our human life, and affecting every country in the world, it became clearer that it would take spirited and

As most of the world, and especially Africa is still reeling from the impact of the COVID-19 pandemic on people and businesses, leaders must come together, in networks such as the African Leadership Council, to respond to the challenges head-on for the sake of mother Africa. We must adjust to the unfolding new normal, by staying top-of-mind and continually engage our leadership and influence for the greater good. Hence if you are a person of impact and leader who is making a difference in the community, then you qualify to join this network of great leaders, to become a member of the council, visit www.africanleadershipcouncil. com today.

We look forward to welcoming committed African leaders - both at home and in the diaspora, partners of Africa, or players on the continent, from across all spheres of influence, who believe that their contributions to African development do make a difference, to join the council today, as the ALC journey begins!

Ken Giami

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Energy

Winners And Losers In The Energy Transition C

ommodity markets can make or break economies. In the first half of the 19th century, the booming whaling industry made New England rich, and New Bedford, Massachusetts, was probably for a while the most prosperous city in the US. But overharvesting made whaling increasingly difficult and whale oil more expensive, and it was steadily replaced for lighting and lubrication by lard, turpentine, coal gas, kerosene and eventually petroleum, after Edwin Drake struck oil in Pennsylvania in 1859.

The International Monetary Fund and the World Bank this week held their annual meetings, and the impact of commodity markets on the world economy was high on the agenda. In the short term, the surge in

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Energy

oil, gas, coal and metals prices is shaking up expectations about the global economic outlook over the next few years. In the long term, the transition to lower-carbon energy implies profound changes in the distribution of resource wealth around the world.

world that is on course to meet that goal, the prices of those metals “would reach historical peaks for an unprecedented, sustained period,” the IMF said this week, adding: “The prices of cobalt, lithium, and nickel would rise several hundred percent from 2020 levels.”

The changes to short-term prospects were set out in an update to the IMF’s World Economic Outlook. The forecast for global GDP growth has been revised down marginally to 5.9% for this year and left unchanged at 4.9% for 2022. But behind that façade of stability there are some significant regional changes, with prospects hit for some countries by the continuing impact of the Covid-19 pandemic and supply chain disruptions and boosted for others by the rise in commodity prices.

Growth in the ASEAN-5 countries including Indonesia and Malaysia is now expected to be much slower than seemed likely in July, while growth in Saudi Arabia and Russia is significantly stronger.

The is clearly bad news for the energy transition. Wood Mackenzie’s Montgomery warns that shortages and soaring prices for raw materials could pose severe challenges to the growth of electric vehicle sales. For the countries that control reserves of those metals, however, it would be a bonanza, transforming global flows of revenues from natural resources.

The boost that those countries are enjoying this year is a reminder of the vital role that oil plays in their economies. But if the world is to meet the goals of the Paris climate agreement, in the long term there will have to be significantly lower demand for oil, gas and coal — to varying degrees — and that will inevitably put downward pressure on prices and exporters’ revenues At the same time, as Wood Mackenzie’s Gavin Montgomery explained in a new briefing this week, the transition will lead to strong growth in demand for some metals, particularly the critical raw materials for batteries: lithium, cobalt and nickel. World reserves for those metals are concentrated in quite a small number of countries: Australia, Chile, The Democratic Republic of Congo, and to a lesser extent a few others including Russia and Argentina.

The energy transition holds the prospect of colossal windfalls for those metals-rich countries. Total energy-related carbon dioxide emissions need to reach net zero by around 2050 to give an even chance of staying inside the Paris agreement’s stretch goal of limiting global warming to 1.5 °C. In a

Over the 10 years 1999-2018, production of oil, gas and coal has generated about $70 trillion in revenues, while production of copper, lithium, generated just $3 trillion, the IMF has calculated.

In a world on course for net zero emissions, those two sums could be much closer together, with the metals generating about $13 trillion over 20 years, while fossil fuel production generates about $19 trillion.

Those IMF numbers are based on projections of steep declines in oil, gas and coal prices, and look excessively pessimistic about the outlook for those revenues. But even if the specific numbers are questionable, the point holds: a Paris-aligned energy transition is a real threat to the long-term revenues of countries rich in oil, gas and coal reserves.

As the International Energy Agency this week published its 2021 World Energy Outlook, its executive director Fatih Birol argued that: “The social and economic benefits of accelerating clean energy transitions are huge, and the costs of inaction are immense.” But the IEA also acknowledged that “the transition also comes with dislocation.” In a world in which countries are implementing the netzero pledges that they have made for the COP26 climate talks next month, about 13 million jobs would be created in low-carbon energy industries, but jobs would also be lost, including about 500,000 in oil and gas and 2 million in the coal industry worldwide. The new jobs

will often require different skills and be in different places from the old jobs that are being lost, and “support must be there for those who lose jobs in declining sectors,” the IEA said.

Patrick Pouyanné, chief executive of TotalEnergies, made a similar point about the importance of “a just transition” more forcefully in a recent interview with Energy Intelligence. “In many emerging countries [oil and gas] is the source of wealth,” he said. “So the idea that you could regulate and say to developing countries, ‘leave your resource in the ground,’ without compensating them… I mean the offer from Western countries would be fair only if they said to these countries … you will get all the revenue. I didn’t read anybody who said that, we just want to regulate their future.”

To help manage the boom in demand for metals, the IMF proposes the creation of a new international institution, analogous to the IEA for energy, to “play a pivotal role in data dissemination and analysis, industry standards, and international cooperation.”

That looks like a useful idea. But managing the downside of the transition will be the harder task.

Chevron sets new emissions goals At Chevron’s annual meeting in May, an investor proposal opposed by the board requested that the company should “substantially reduce the greenhouse gas emissions of their energy products (Scope 3) in the medium- and long-term future.” That proposal was approved with 60.7% of the shareholder votes cast, and this week Chevron set out its response, becoming the first significant US oil and gas producer to set a medium-term target for the Scope 3 emissions produced when its products are used.

In its new Climate Change Resilience report, published on Monday, Chevron set out details of two new objectives: a longer-term “aspiration” to reach net zero for equity upstream Scope 1 and 2 emissions by 2050, and a mediumterm target to reduce the carbon intensity from the use of its own

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Energy

products, including Scope 1, 2 and 3 emissions, by 5.2% from 2016 levels by 2028.

“When we meet with investors and other stakeholders, Chevron’s approach to climate change and the energy transition is an important part of the dialogue,” the company’s lead director Ronald Sugar wrote in his introduction to the report. “At this year’s annual meeting of stockholders, the level of support for climate-related proposals indicated investors’ expectations for additional information and action.”

He added: “We believe the future of energy will be lower carbon, and we intend to be a leader in that future.”

Other US oil and gas companies have set similar long-term net zero goals. ConocoPhillips last year announced its ambition to have net zero Scope 1 and 2 emissions by 2050, and Pioneer

Natural Resources set out a similar ambition this year. Antero Resources has set a goal of net zero Scope 1 emissions by 2025, and Diamondback Energy says it is already at net zero on a Scope 1 basis, using carbon offsets to cover its emissions. Occidental Petroleum says it has a pathway to net-zero Scope 1, 2 and 3 emissions by 2050. But Chevron is the first US oil and gas company to set a medium-term target that includes Scope 3 emissions.

Its targeted metric, called Portfolio Carbon Intensity, is based on total group emissions, in Scope 1, 2 and 3, less any carbon stored or offset, relative to total energy sales. Bruce Niemeyer, Chevron’s vice-president for strategy and sustainability, explains that that gives the company a range of options for cutting emissions, including improving efficiency, changing the portfolio, investing in low-carbon energy technologies, and using offsets. It covers the full value chain, including Scope 3 emissions

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from the use of products.

Mike Wirth, Chevron’s chief executive, has been very clear that he does not see opportunities for the company to create value by diversifying into wind and solar power. But the company is building operations in other low-carbon technologies including hydrogen, carbon capture and biofuels.

Niemeyer says the group’s normal capital allocation process also supports lower carbon emissions.

Over the next four years, twothirds of Chevron’s upstream capital spending will be going to six assets, including the Permian and DJ basins in the US, TCO in Kazakhstan and LNG projects in Australia, which will help lower overall upstream carbon intensity.

Chevron has already cut its Portfolio Carbon Intensity significantly. It was 74.9 grams of carbon dioxide equivalent per megajoule of energy sold in 2016, the baseline year, and had dropped to 71.4 gCO2e/MJ by 2020. The

Energy

face of wildfires and safety-related shutdowns.

Lebanon suffered a total power outage for 24 hours last weekend, leaving the country’s 6 million people without any electricity from the grid. The state electricity company said the shutdown of the country’s two main power stations was due to fuel shortages. The lights were brought back on after the army provided emergency fuel and the country’s central bank extended $100 million credit for the energy ministry to buy more.

Experts convened by the King Abdullah Petroleum Studies and Research Center say that India is unlikely to meet its target of 30% of car sales being electric vehicles by 2030 due to problems including a lack of policy support and inadequate charging infrastructure.

2028 goal is for a further fall to 71 gCO2e/MJ. Follow This, the environmental activist investor group that filed the shareholder proposal, welcomed the move to include Scope 3 emissions, but described the target to reduce carbon intensity by 5.2% from 2016 levels as “disappointing” and “not a serious attempt to confront the climate crisis.”

Niemeyer said the target should be seen in the context of the corporate response to international climate policy. “Our first emissions targets were for 2023; our next targets are for 2028. We are on the same cycle as the Paris climate agreement.

That includes a series of five-yearly reviews, and companies will have to assess what is happening on that same five-yearly cycle,” he said.

“There is a progression here.”

He added that Portfolio Carbon Intensity was an indicator that could be used more widely across the industry. “What we have proposed is a relatively simple metric. Any company in the

industry could use it. And people can compare the portfolio carbon intensity of different companies.”

In brief President Vladimir Putin of Russia has denied allegations that his country is using gas as a weapon, withholding supplies from Europe to drive prices higher. Speaking at an energy forum in Moscow, he reiterated that Russia was ready to send more gas to Europe, and had already increased sales by 15% in the first nine months of 2021.

US consumers should expect much higher bills for oil, gas and power to heat their homes this winter, the Energy Information Administration has warned. “The high prices follow changes to energy supply and demand patterns in response to the Covid-19 pandemic,” the EIA said.

Purchases of diesel backup generators have been booming in some parts of California, as businesses and individuals look for ways to keep the power on in the

And finally, a biofuel fit for a prince.

Prince Charles, heir to the throne of the UK, gave an interview to the BBC to talk about climate change and the upcoming COP26 talks in Glasgow. It is an interesting, wide-ranging conversation, but the line that really caught on with the media was the fact that the prince’s beloved Aston Martin DB6, a present from his mother for his 21st birthday, runs on ethanol made from “surplus English white wine” and fermented whey from cheese-making. It is not exactly news: the prince revealed that the car had been converted to run on an E85 ethanol blend back in 2008.

But there is obviously something irresistible about the idea of a royal car fueled by wine and cheese.

The broader point made by Prince Charles is that, although most of the vehicles on his estate are EVs, they have their limitations, and other low-carbon transport technologies, including hydrogen fuel cells, will be needed. He is right about that, but given the progress made by EVs and the bets being placed on them by manufacturers, as well as the repeated failures of advanced biofuels to live up to the hype, it looks as though the E85-enabled Aston Martin is likely to remain a rarity.

Source: Wood Mackenzie

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Energy

Slow exit of Covid-19 menace ushers in darkness as energy crisis looming

By Ritesh Barot, Business & Financial Analyst

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enyans are furious over repeated fuel price increases this year. The latest last month caused a rumpus as wananchi were already suffering economic adversity due to the effects of the Covid-19 scourge.

2020 economic activity globally came to a near standstill. There was a nosedive in international travel, factories were working under-capacity and demand for most products had reduced thereby leading to a cut in manufacturing.

whereby the price rise is attributed to increased taxes, the global priceincrease scenario is due to the currently strained supply of energy.

Manufacturing plants are paying astronomical prices for coal to fire their production.

Fuel prices are at record highs due to an increase in taxes approved by parliament. Petrol prices currently stand at Sh129.72 from Sh135 last week per litre in Nairobi following the latest adjustment on Thursday.

Consequently, the aggregate demand for energy went south.

Global major oil producers slashed output. After administering Covid-19 vaccines, countries are mostly out of lockdown and air travel is slowly getting back on track. Suddenly demand for energy has skyrocketed whilst the supply remains low.

From coal shortages in China and India to gas dearth in the UK, a global energy crisis is brimming and it is affecting everyone as prices across the globe have started to spiral leading to high inflation.

After suffering job losses, many sectors including tourism being most affected, Kenyan Gross Domestic Product shrank last year for the first time in three decades.

Compounded with uncertainty in the economy and ongoing jobs crisis, fuel prices rise leads to an upsurge in costs of production, food prices, transport and the cost of living as well as inflation.

There is a similar problem brewing across the world. During the year

Non-renewable energy The world is running on electricity and fuel. Heating, lighting, manufacturing, travel, transport are all fuelled by mostly nonrenewable energy including coal, petroleum and natural gas.

Unlike the situation in Kenya,

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In most of Europe, there is a natural gas crisis, the Eurozone inflation reportedly being at a 13year high.

In China, factories are shutting down citing coal shortages. South America reports looming power cuts due to energy shortages. Has a rapid post-pandemic recovery led to this situation?

After the Covid-19 menace, this impending energy crisis threat

Energy

could end up in empty shelves as far as the eye can see. In the UK, after a botched Brexit, the country is facing a self-inflicted crisis, not due to lack of fuel but due to lack of drivers and the British soldiers are driving oil tankers, delivering fuel to empty gas stations.

Europe’s gas reserves are also falling significantly as the continent faces the worst fuel crisis in modern history. China’s attempt to go green and drastically cut carbon emissions with immediate effect has led to slowing down of mining whilst demand for coal has not reduced.

Factories across the entire China have started to ease production as there is not enough coal to fuel production lines, even as producers import coal at a much higher price than ever before.

Aluminum prices The price of natural gas and coal used for production has risen to multi-year highs. Over 80 Chinese steel mills have indefinitely suspended production for maintenance due to the low availability of coal and their

inability to carry out operations.

In India car manufacturer Maruti has already raised prices three times this year. Aluminum prices will soar to multi-year highs. The green energy supplies are unable to match the energy demand from the factories.

There has been a difficult transition to green energy. Was there a clear road map for climate action and provision or investment in green energy? In the case of China, In order to meet climate goals, was it prudent to cut off coal supply and leave the nation in the dark?

Should there have been a strategy in place to provide for the expected sharp economic rebound compounded with the green transition? The movement towards green energy led to many European countries relying on wind farms in the North Sea. Gas reserves The wind in the North Sea has stopped blowing, turbines stand almost motionless, forcing regional energy markets to struggle for gas

reserves to heat homes during winter and power industries. The Nordic region is experiencing a power crunch due to subsiding water reservoirs affecting hydroelectric power output, causing their fuel prices in September 2021 to be five times higher than 12 months prior.

Europe could face blackouts at the peak of winter. China’s industrial users including chipmakers and aluminum smelters could face shut down of factories with the repercussions echoing around the world. Economies that cannot afford the fuel could easily grind to a halt.

So how does it affect us? Cars, electrical appliances, devices, medicines, transportation, everything will get more expensive.

All production will take place at a higher cost and manufacturers will be forced to raise prices that are then passed to consumers. Even as the world sees a glimmer of light through the Covid pandemic, darkness may be falling as we run out of fuel.

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Petroleum

Guinea Conakry Commits to Increasing Upstream and Downstream Activities

By Matthew Goosen

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ith advancements in the establishment of a structured, transparent, and coherent, national energy policy, the Government of GuineaConakry is demonstrating its commitment to the development of upstream and downstream activities in the country’s petroleum industry. www.africaenergyandinfrastructure.com | 14

Guinea-Conakry’s National Petroleum Office (ONAP) was formed in 2015 by presidential decree following the Government’s implementation of a new Petroleum Code in late-2014, placing the office under executive authority. During the same year, the Deepwater exploration and production

Petroleum

company, Kosmos Energy, discovered hydrocarbon reserves in Block C-8 of the Greater Tortue complex, raising hopes for Guinea’s offshore potential. While the role ONAP plays in the petroleum industry is primarily regulatory, the office is due to receive commercial responsibilities once viable oil discoveries are made. The Natural Resource Charter framework, which defines a set of economic principles designed to assist in the governmental management of natural resources, stipulates in Percept 3 that geographical information must be gathered before the licensing phase. Thus, to increase the interest of international investors and attract bids for the country, ONAP, international organizations, and the Guinean Government are promoting the development and analysis of more on- and offshore geological information.

While working to develop, implement, and monitor the Guinean Government’s upstream policies and promote the assessment of the country’s infrastructure for the storage and distribution of petroleum, ONAP is establishing the bidding terms to award exploration licenses for 22 of Guinea-Conakry’s unexplored offshore blocks. Accountability and transparency have been noted as an opportunity for the country to apply international standards and best practices in bidding and to monitor the management of petroleum-linked revenue. In 2017, the Ministry of Mines and Geology improved the investment climate in the sector by joining the global open data movement, noting the value of publishing reliable information.

In the past, the collection and analysis of energy information and statistics in Guinea-Conakry has had its limitations. Information was often confined to separate administrations, which resulted in the unnecessary duplication of activities in the sector. Thus, the formation of the National Directorate of Energy (DNE) and the establishment of the Energy Information System (SIE) has enabled transparency concerning the state of resources and a streamlining of activities in the

petroleum sector. The SIE provides the DNE a platform to publish and disseminate reliable and consensual data at a complete and centralized level in order to attract explorers, developers and investors.

Guinea-Conakry’s Ministry of Energy and Hydraulics is responsible for the country’s energy sector, sharing ministerial management in petroleum exploration with the Ministry of Mines and Geology, and exercising its authority through the DNE to strengthen policies, strategies, and programs to promote the nation’s petroleum potential.

According to the SIE website, “The development and implementation of an energy policy can only be anchored on a clear, detailed, and dynamic vision of the energy sector as a whole, access to reliable energy information is therefore a major challenge for establishing a structured and coherent national energy policy.”

While the true extent of Guinea-Conakry’s oil and gas potential remains relatively unknown, the future prospect of the West Africa’s country’s petroleum sector is promising. In February 2012, the U.S.-based, independent oil and gas exploration company, HyperDynamics, conducted oil exploration studies offshore Guinea-Conakry and encountered non-commercial oil shows at its Sabu-1 exploration well. Five years later, in 2017, multinational petroleum refining company, TotalEnergies and ONAP signed a Technical Evaluation agreement to evaluate deep and ultradeep offshore areas over an area of approximately 55,000km2.

The activities reportedly found no exploitable quantities of oil, however, there is still evidence that the offshore regions of the country do contain commercially viable oil, with trust that the increasingly productive role being played by ONAP will promote further oil exploration in Guinea-Conakry.

local Guineans. The oil and gas giant also owns a 47% stake in the West African country’s sole private petroleum importer, the National Petroleum Company (SGP). Currently, Guinea-Conakry has a limited storage capacity for petroleum products, with the SGP capable of storing a supply offering approximately three weeks of demand for mining companies, retail stations, and the country’s state-owned electric utility grid, the primary consumers of the country’s petroleum supply.

In lieu of the country’s minimal oil reserves, the national structure responsible for the production, transport, and distribution of energy is the country’s national power utility, Electricité de Guinée (EDG), whose mission is to implement rural electrification and stimulate socio-economic growth. Currently, the EDG is working to build a 225kV high voltage line to link the Maneah substation in the Kindia Region of western Guinea-Conakry, to the Linsan substation in the Labé Region of the northerncentral area of the country.

Also under development is the $250,000 Guinea-Malo Electrical Interconnection Project that interconnects a 225kV line leading from the Sanankoroba substation in Mali to the N’Zérékoré substation in Guinea-Conakry. Financing for the projects were provided for by the African Development Bank and the Agence Française de Développement.

In March 2021, one of the West African region’s largest hydropower development projects, Guinea-Conakry’s $2 billion, 550 MW Souapiti hydropower plant, began commercial operation.

Electricity generated by the plant is fed to the Kaileta substation through a 225kV transmission line, capable of generating up to 2 billion kWh annually, with excess power supplying neighboring countries, such as Senegal, Mali, and GuineaBissau.

TotalEnergies has been active in the country since 1992 and is the first distributor of petroleum to the country, owning a retail network of approximately 180 service stations and employing over 100 www.africaenergyandinfrastructure.com | 15

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Cover Story

BRIGHT TIMES AHEAD: Africa's Innovation, Finance, and Renewables Leading the Way

A

s 2022 rolls in, and while Covid is still a big part of our lives, with vaccines presenting some problematic issues, and Omicron is reinforcing some difficult challenges across the continent, and worldwide, Africa saw some positive developments.

Global investment, innovation, and a renewable wave set the tone for a positive outlook while paving the path for a much-awaited 2022.

Emerging from the Covid recession

Albeit bleak economic predictions for Africa's financial future under the Covid umbrella, sub-Saharan Africa is set to emerge from the 2020 pandemic-sparked recession, with growth expected to expand by 3.3 percent in 2021. This is one percent higher than the April 2021 forecast, according to the latest edition of Africa's

Pulse, a World Bank's bi-annual report. This unexpected bounce is fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade. The report predicts continued, albeit modest, growth for 2022 and 2023.

Some of the continent's largest economies, including Angola, Nigeria, and South Africa, are expected to grow by 0.4

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Cover Story

percent, 2.4 percent, 4.6 percent, respectively. The rest of SSA is rebounding at a growth rate of 3.6 percent in 2021.

considerable growth in both new ventures and investment terms.

be met through clean, renewable energy.

Countries such as Egypt, Ethiopia, Kenya, Morocco, and South Africa are leading the increase in renewable energy supply, while some of Africa's smaller countries, including Cabo Verde, Djibouti, Rwanda, and Eswatini, have set ambitious renewable targets.

Looking ahead, The International Monetary Fund (IMF) predicts a 3.8% growth in 2022, and to that end, ensuring accelerated vaccine distribution in sub-Saharan Africa plays a vital role. The longer we allow such a large proportion of the global population to remain unvaccinated, the greater the possibility that new virus variants will develop. A Covid-free world runs through sub-Saharan Africa, requiring significant investment and a change in mindset for many.

According to the World Intellectual Property Organization, the more developed an economy is, the more it innovates and vice versa.

Few economies break this pattern, and SSA is a definite anomaly, as the region boasts the most significant number of economies performing above expectations for their level of development. This is very encouraging, but investment, both within countries and from global investors, is vital to spark innovation on the continent further.

According to the World Bank, African countries, which currently invest only 0.01% per capita in innovation, must put more money and effort into the growing sector to secure the future of its extremely young population. International investors have a crucial role in establishing innovation as a growth engine across the continent. With some up-and-coming technologies and entrepreneurs, they have every reason to do so.

African innovation is breaking records

Renewable energy is becoming influential

According to Bloomberg, fundraising by African startups is set to reach $5 billion in 2021, a higher amount than the figure raised in the previous three years combined. The continent's youthful and growing population, rising internet penetration, and the application of emerging technologies that could improve access to healthcare, financial services, education, and energy, all factor in the ecosystem's staggering growth. In fact, between 2015 and 2020 growth of African tech startups receiving financial backing was nearly six times faster than the global average.

A month and a half after coming to a close, COP26 is still under heavy debate, with some saying it was an excellent success for Africa and others calling it a monumental debacle.

According to the report, multiple countries across the continent have seized the global crisis as an opportunity to foster necessary macroeconomic reforms. These include the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and opening the telecommunications sector to the private sector in Ethiopia.

Covid has an essential role in this innovation acceleration, as more than 120 health technology innovations have been piloted or adopted in Africa, according to the World Health Organization (WHO), accounting for 12.8% of worldwide innovations relating to the pandemic. Alongside healthcare-related ventures, fintech was another sector that witnessed

Albeit falling short of the African negotiation team's requests of $1.3 trillion a year, the conference attendees pledged more financing.

The target of $100 billion is now expected to be reached by 2023.

COP26's president, Alok Sharma, stated that around $500 billion would be mobilized to developing nations by 2025, with many of these funds going to Africa. These international investments, coupled with private sector funds, will have a crucial role in fostering the continent's green energy transformation.

The International Renewable Energy Agency (IRENA) estimates that with the right policies, regulation, governance, and access to financial markets, sub-Saharan Africa could meet up to 67 percent of its energy needs by 2030. A quarter of those energy needs could www.africaenergyandinfrastructure.com | 18

Renewable energy use is gradually rising across the continent with an annual growth rate of 21% between 2010 and 2020 and a current total capacity of more than 58 GW. Some notable projects from the past year show that the sector is becoming increasingly influential across the continent.

In the past month alone, Rio Tinto broke ground on a hybrid renewables project in Madagascar, Germany decided to back green power initiative in SSA with EUR 49m, Norwegian clean power producer Scatec ASA announced an upcoming 20-MW solar PV plant in Lesotho, and Malawi's first utility-scale solar PV plant, the 60MW Salima Solar project, has been officially inaugurated. There is still much to be done, but the renewable future is gaining momentum.

With an optimistic outlook, a rebounding economy, a growing innovation sphere, and a flourishing renewable landscape, Africa's future is bright. Global investments and vaccine fairness acts are crucial in spurring this growth and should be targeted by governments, investors, and businesses worldwide.

Happy 2022!

The writer is an entrepreneur and investor,leading sustainabilitydriven companies in Africa and the Middle East.

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Cover Story

THE NEW F RONTIERS: Winning in The African Oil and Gas Industry

By Anton Botes

I

n Africa, oil and gas has historically been a primary driver of economic growth.

Despite an inconsistent GDP growth in the past, the potential of the country’s oil and gas sector cannot be overlooked. Recent oil and gas discoveries, coupled with regulatory changes and fast-growing energy demand from expanding local consumer markets offer significant opportunities across the continent.

Africa is the last energy frontier, a vast continent of opportunities and potential pitfalls. Eight factors should be considered by multinationals looking to invest and operate in Africa.

AFRICA is the last energy frontier, a vast continent whose oil and gas reserves are expected by some analysts to see it emerge as the new global hub. But Africa has a habit of dashing forecasts.

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In 2000, The Economist dubbed Africa ‘hopeless’. Over the next decade, Africa rebutted that tag: labour productivity rose, inflation dropped and economies boomed.

The Economist positively revised its opinion of Africa in 2011 Three years later, a crash in oil prices changed that upbeat narrative with a devastating economic blow to African oilproducing nations. Economies

business costs, low growth and a lack of business diversification. Yet, Angola has the second-largest oil resources and is the second-largest oil producer in sub-Saharan Africa.

What remained unchanged throughout the period is the potential of the African oil and gas sector.

The continent possesses 7.5 per cent and 7.1 per cent of global oil and gas reserves, respectively.6 As international energy prices recover, the continent is again attracting investor interest.

As a result, it is receiving increasing levels of FDI, boosted by the Angolan government passing several policies in early 2018 encouraging foreign investment.

Recent oil and gas discoveries coupled with regulatory changes and fast-growing energy demand from expanding local consumer markets offer significant opportunities across the continent. In a 2018 report, African Oil and Gas State of Play, Deloitte examined notable destinations in nine sub-Saharan African countries.

In this article, we summarise the opportunities and potential pitfalls. It is not only the challenging operating environment, coupled with a lack of transparency, regulatory uncertainty and policy instability, and ongoing infrastructure deficit that hinder investment.

How the African industry is evolving Nigeria is a mature oil-producing economy with substantial foreign direct investment (FDI), but delays in reforming the sector have deterred further investment. Governance challenges, corruption, as well as economic, security and high cost concerns also hinder investment.

The country is still the region’s largest oil and gas producer overall and is expected to be the largest refiner and exporter of petroleum products in Africa by 2022.

Improving economic conditions and transport sector growth could see domestic consumption increase by 31 per cent between 2017 and 2023.

Investment in gas infrastructure, such as new pipelines, will boost production. Opportunities exist for players with the government intending to privatize ten power stations as part of efforts to guarantee an effective and sustainable power supply in the country.

Angola is less attractive from a regulatory perspective. It also grapples with corruption, high

Angola also has the fourth-largest proven natural gas reserves, although the country only produces small amounts commercially. A 2018 presidential decree offers incentives for investment. Consumption is expected to more than double between 2017 and 2023, although the large distances between gas production sites and consumers and a lack of pipeline infrastructure are significant constraints.

Several African countries are looking to stimulate investor interest through affiliation with the Organization of Petroleum Exporting Countries (OPEC).

Congo-Brazzaville joined OPEC in 2018. This, together with a licensing round of 18 blocks (onshore and offshore), could increase investment and reverse declining reserves and production. Production will ramp up in 2019 as projects come online.

Refined products consumption has been rising, growing by 28 per cent between 2010 and 2017. This should continue to grow apace with the country’s rapidly increasing population. Refinery capacity is still the main constraint.

Equatorial Guinea joined OPEC in 2017, but lacks new discoveries and is working maturing oil fields. While oil and gas resources are likely to shrink in the coming decade, the country is still the second-largest producer of natural gas. In May 2018, Equatorial Guinea announced plans to develop a natural gas mega hub linking onshore processing and offshore production facilities.

Crude production has been on the decline in Gabon since 2010. The country re-joined OPEC in 2016 and revamped legislation in the hope of attracting investment, particularly for offshore exploration. These revisions should make licensing and fiscal terms more competitive and flexible.

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There is no universal recipe for winning in the sub-Saharan Africa oil and gas sector. However, soft and hard skills, paired with the right timing, and an understanding of market-specific conditions will bring success.

Eight factors should be considered by multinationals looking to invest and operate in Africa.

Investing in local partnerships.

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have slowly recovered and Africa’s gross domestic product (GDP) growth is expected to accelerate to 4 per cent in 2019,5 providing grounds for cautious optimism.

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While established oil and gas countries look to reinvigorate FDI, the spotlight is also shining on Africa’s new contenders. As the region’s newest oil producer, Ghana has seen the highest growth in oil production among its peers.

In late 2018, the country launched its first offshore licensing round with six blocks. This contributed to a rise in exploration activity. A long-debated Petroleum Bill, passed in August 2016, is set to improve the broader regulatory environment and remove major barriers to exploration.

A favourable ruling in September 2017 on the long-running maritime border dispute with Côte d’Ivoire also brightens the country’s prospects. But refining capacity is constrained, and limited oil pipeline infrastructure may affect consumption.

Mozambique holds the largest gas resources in the region, so has the largest untapped potential. Domestic and governance challenges aside, the country has seen the largest flow of FDI over the past eight years among its peers.

Recent discoveries multiplied proven reserves and will underpin the country’s projected economic recovery. Plans for the coral floating liquefied natural gas development in the Rovuma Basin, as well as the Anadarko Petroleum project in the north are two prominent developments. Given the complexities of these projects, production is not expected until 2022.

Tanzania has the fastest-growing economy among its oil and gasproducing peers in the region and the second-largest natural gas resources.

While production is low, the discovery of new offshore fields has the potential to transform the economy. Its closer location to Asian markets gives Tanzania a geographical edge over peers, although exports of liquefied natural gas based on a planned onshore export facility have been delayed for at least five years.

Another market to watch is Uganda.

Discoveries in 2006 proved the country has the fifth-largest oil resources in the region and new exploration licences are being awarded. Production is expected to start in 2021 and the construction of

a pipeline from Hoima (Uganda) to Tanga (Tanzania) began in 2018.

There is no universal recipe for winning in the sub-Saharan Africa oil and gas sector. However, soft and hard skills, paired with the right timing, and an understanding of market-specific conditions will bring success. Eight factors should be considered by multinationals looking to invest and operate in Africa.

Investing in local partnerships.

Given the complexity and nuances of local markets, finding the right local partners is crucial. Partnerships may range from those focused on geographical and technical expertise to those that provide access to networks, channels and local decision-makers.

Local partners with on-the-ground experience can help entrants understand local business etiquette and culture. These ‘softer’ elements are crucial to success. Partnering with experienced businesses can help a market entrant navigate the local regulatory environment, overcome distribution challenges and avoid costly mistakes.

The complexity of the search for the right partner should not be underestimated. Due diligence is necessary when evaluating potential partnerships, particularly in the context of mitigating the risk of unwittingly becoming complicit in corruption.

Capitalising on local market knowledge. Working with entities across the public and private sector can prove difficult given the trust deficit between governments and businesses. To narrow this, use trusted local advisors and mediators with a proven track record. While hiring local staff is one choice, partnering, or acquiring local firms allows fast-track access to knowledge and networks.

Although a wealth of data, information and insights exist on African economies, investing in data collection, on-the-ground insights and expert information is also crucial.

In-country market experience allows companies to gain first-hand knowledge and to build long-term strategies.

Understanding local customs and business culture. Investing in

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“

Given the complexity and nuances of local markets, finding the right local partners is crucial.

Partnerships may range from those focused on geographical and technical expertise to those that provide access to networks, channels and local decisionmakers.

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New contenders

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partnerships and market knowledge promotes an understanding of local customs and the business culture.

Players need to consider their ‘style’ of entering a new market.

Business practices differ and the wrong approach might come across as overconfident or arrogant.

Intelligent engagements with stakeholders can help ease market entry.

Building a winning business in Africa is a longterm play. A focused approach to understanding the practices and customs in one market may help expansion into other African economies.

Developing local content and localisation strategies. Players must embrace localization to lower supply chain costs, boost local skills development, reduce risk and enhance their reputations with the governments and local communities in which they operate.

Local legislation prescribes or at least encourages a minimum procurement of local goods, services and labour. The consequences of noncompliance vary from monetary penalties to impacts on the granting or renewal of licences.

For local content to be sustainable, a long-term and end-to-end localisation approach must be followed throughout the project life cycle from exploration through to

decommissioning.

To develop longer-term and broader-view localization strategies, players should engage with local communities, authorities and stakeholders from early on. The value of localisation plans appears when they form part of the overall development plans of the host country. It is then that localisation strategies create true socioeconomic value.

Creating value beyond compliance.

When navigating the compliance landscape, companies must move beyond ‘tick-the-box’.

Implementing industry and technical expertise helps companies enable increased socioeconomic impacts, improve business and operational efficiencies, and share value.

Creating value for surrounding communities and contributing in a meaningful way to economic diversification and developmental challenges needs a new socioeconomic framework and new business models. The principle of Shared Value is such a framework.

It aims to address social issues with a business (profit) model to make positive gain and win-win choices where stakeholders (players, communities and local government) share an interdependent future.

The key premise is that the

competitiveness of a business and the health of the community in which it exists are interwoven.

Through business decisions, policies and practices related to products, services, supplier, and local economic cluster development, companies can advance the economic benefits and social conditions of their communities while enhancing their competitiveness. Active stakeholder engagement and communication are required on a long-term basis to fulfil potential and manage risks.

Portfolio management and diversification. Players need to decide on their portfolio at the outset of operations. Diversification beyond core business functions may be necessary to overcome business challenges omnipresent in many African countries. For example, ensuring electricity for day-to-day business operations may mean investing in power infrastructure.

Acquisitions for securing infrastructure, skills, or distribution networks is one approach. Strategic acquisitions enable firms to diversify their portfolio and move into new sectors. For example, some firms have looked to balance the risk of commodity price fluctuations in oil and gas by diversifying into renewable energies.

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As capital intensity, cyclical prices, and long horizons rule oil and gas operations, portfolio management focusing on the core business is important. As portfolios evolve, they need to be rebalanced for greater focus on transformational changes that leverage multiple types of innovations simultaneously.

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Companies need to plan for the risks of investing and operating in Africa.

These include regulation and policy, third parties such as partners or suppliers, infrastructure, labour and the environment.

Macro risks, such as political, security, governance, economic, structural, country liquidity and currency risks, also loom large

Embracing digitalisation. Robotics, digitisation, and the Internet of Things (IoT) are transforming the operational environment of oil and gas companies, creating greater productivity, safer operations, and cost savings. However, a Deloitte survey of industry executives found current initiatives focus on core innovation with shorter term returns.

This approach is linked to the challenges faced in re-evaluating projects following the oil price downturn after 2014.8 For players, one of the advantages of adopting digital technology could be the resilience these technologies offer to downturns and adverse consequences in Africa. Players benefit from a coherent framework that helps achieve near-term business objectives, measures digital progression through stages of evolution, and offers a pathway to transforming the core of operations, real assets and the business model.

A strategic road map can assess the digital standing of every operation and identify digital leaps for achieving specific business objectives.

Further, the rapidly changing dynamics of the industry require new technology-driven solutions to respond to disruption. Disruptors stem from many avenues, including customers expecting a consistent digital experience across channels and content.

Identifying risks and planning for uncertainty. Companies need to plan for the risks of investing and operating in Africa. These include regulation and policy, third parties such as partners or suppliers, infrastructure, labour and the environment. Macro risks, such as political, security, governance, economic, structural, country liquidity and currency risks, also loom large. Technological risks, such as cyber and other digital risks are also becoming more prominent in Africa.

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Political tensions are often shortterm, and associated with elections and fast changing perceptions. These can receive broad media coverage and firms need to respond quickly.

Long-term risks, like structural issues within a society, come with less urgency and mitigation is long and costly. Yet, these often prove to be most damaging. To help navigate the complexities and to chart a path of success, tools such as scenario planning help identify and mitigate risks in innovative ways.

In practical application, there is no one-size-fits-all approach. Risk, compliance and controls need to be integrated in one system across the firm. Further, players need to make sense of the local environment and develop local mitigation strategies for individual markets, rather than at a group level. Understanding the evolving risk landscape enables risks and opportunities to be managed in a way that is both opportunistic and sustainable.

Conclusion The conclusions presented in the article are based solely on assessment of the oil and gas sectors in the individual countries and do not refer to the broader socioeconomics aspects of particular countries.

It is important to note that the eight cross-cutting factors outlined cannot occur in isolation. A key ingredient is to establish an ecosystem that enhances collaboration between various industry stakeholders. Such ecosystems are fostered by incentives that encourage organisations to participate, thereby unlocking further collaboration and innovation.

Ultimately, ecosystems lower costs and encourage innovation through collaboration between players along the supply chain. Trust between suppliers and operators is vital to create long-term partnerships that can reap the benefits of an integrated environment. Nurturing an ecosystem where innovation can truly thrive is essential in the African oil and gas industry to generate significant value for customers, shareholders and employees.

Source: Anton Botes Africa Oil & Gas leader - Deloitte abotes@deloitte.co.za

Country Focus

President Adama Barrow & Economic Progress in The Gambia.

T

he President of the Republic of the Gambia, Adama Barrow, has described the journey towards the end of the present administration governing the country as one ending on a ‘very high note’.

In an exclusive interview with African Leadership Magazine, Barrow disclosed that the government had set out with a mindset to carry out projects that would improve the lives and welfare of citizens in the Gambia. He expressed solid hope at ending on a positive note as his government had, since inception, committed itself to see the development of the country, which is described as the smallest within mainland Africa.

The President of the Republic of the Gambia, Adama Barrow, having a chat with : Dr Ken Giami, Chairman and Publisher, African Leadership Magazine (UK) Ltd

achieved under the current administration, which has seen tremendous growth and development in no small measure.

President Barrow pointed to the administration’s zeal at improving the lives of Gambians as it brings to fruition specific projects that have only been discussed for over 50 to 60 years. Notable projects include the OMVG electrical substation, which he called a gamechanger for Gambians and the ongoing construction of over 20 health facilities across the country. He stated ongoing efforts at construction on different roads across the country, which culminate in contracts covering over 300 kilometres. In addition, he mentioned the OIC road projects, which would provide the Gambia with its first flyover bridges.

Commenting on the economy, Barrow noted the progress

“Our economy was growing between 1 to 2 percent. It was struggling. Today, we are growing at 6.1 percent. If you look at the treasury bills, when I came, interest rates were at 23 percent.

Today, interest rates are at 4 percent. Commercial banks were lending at 30 percent. Today, they are lending between 15 to 16 percent.

Barrow noted that the present administration has increased collection by over 100 percent, pointing to state resources as the source of primary funding for most projects. He noted that a key mandate of his government has been to manage national resources well, enough to create a meaningful impact in the lives of citizens in the Gambia. With the Presidential elections over, the close of the present tenure marks a successful end to the dramatic circumstances that saw Barrow ascend the Presidency of the Republic after fending off stiff opposition and being sworn in twice.

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Country Focus

GNPC – Promoting Sustainable Energy Investment In Gambia’s Hydrocarbon Sector www.africaenergyandinfrastructure.com | 26

The Gambia, the smiling coast of Africa, has long been oriented around agriculture, foreign remittances, and tourism, which accounted for up to 20% of GDP pre-COVID-19. However, this looks set to change, as large-scale oil and gas discoveries between 2014 and 2017 in neighboring countries like Senegal and Mauritania presents a renewed hope for the country’s hydrocarbon potentials. Investors have also renewed interest in exploring opportunities in other countries within the MSGBC Basin. In this exclusive interview with African Leadership Magazine UK, the Managing Director and Chief Executive Officer of Gambia’s National Petroleum Corporation, GNPC, Yaya F. Barrow, talks about the organization’s efforts to support ready investors in the country’s country oil and gas sector. Excerpts.

Thank you very much. That’s an excellent question. When I joined this institution in 2018, October 18, 2018 to be more precise, I was a bit apprehensive as I found staff vocalizing a lot of concerns, and limited organizational structure within the institution. Using the experienced that I’ve gained over the 25 years in the financial industry, and knowing very well that GNPC is the core of petroleum and energy business, my priority was to ensure that we organize, re-strategize and focus on a trajectory of growth so that the institution becomes profitable.

I focused on 3 things; capacity building, accounts reconciliations to enable audited accounts and reports generation.

So, amongst the first things I did was an organizational restructuring in order to put people with the right skills and capacity in the proper positions. We did a skills gap assessment to gauge whether staff possessed the required skillset to do their needed work. Consequently, the organisation undertook massive training in 2019 with about 80% of the staff trained, through either classroom training, seminars or industrial attachment to build capacity. And this helped a lot as we could see improved output after they had returned from those engagements.

On the financial side, which I was also worried about, my primary target was to improve the bottom line and I utilised a bottom-up approach to this. I found the corporation operating too many accounts and coming from a financial background, I thought that was a breeding ground for fraud. I immediately engaged the board of directors, and they gave me the go-ahead to close most of the accounts and maintain one account per bank.

Country Focus

There was a back log of accounts reconciliation which held up our annual audits. I therefore appointed temporary staff to help the finance department. As a result, we were able to complete the reconciliation; close redundant accounts, and avoid unnecessary charges. The finance department was encountering issues with generating some reports so I also worked with the finance director to bring in new software, which assisted in developing a reporting format ensure that we can generate timely reports. This also assisted greatly in completing the reconciliations on time.

As a result of these efforts, for the first time in more than four to five years, GNPC was able to register our profit in 2019. I was able to do this just one year into the institution because, as I said, I joined at the tail end of October 2018. But in 2019, we were able to register a profit after auditing by external auditors after some 4-5 years.

COVID-19 took the world by surprise when it struck; it must have had a lot of impact on some of your projected programmes. In your own words, how would you describe the pandemics impact on your projects and programmes?

As you rightly said, COVID did not spare any country or institution and there were no boundaries. So, on our side, it negatively impacted the sale of petroleum products. There were reduced sales at our stations, which influenced our bottom line. During COVID, especially the first month, movements were restricted in this country. Trade was down, even the people moving within the borders, with Senegal, in particular, were restricted to contain the disease.

So that had a severe impact on our business.

It reduced our sales significantly and in fact not only our sales, but we also had a project to build our flag-ship retail station, which is right across this building. The construction of that station was delayed because the contractor claimed a force majeure since the workers stayed away from work due to restrictions. There was no activity at the site for almost five

“

The MSGBC basin has been the focus for investors in oil and gas.

There has been a massive discovery in the MauritaniaSenegal border, substantial gas deposits. In Senegal, the Sangomar oil field also found oil and gas and these all sit on the same MSGBC basin, right from Mauritania to Guinea Conakry.

“

You have had about three decades of experience in the banking sector; right now, you’ve crossed over to the oil and gas sector. And of course, what you bring to the table is an enormous experience in managing projects and businesses executions. What is your core objective in terms?

And how has it been achieved thus far?

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Country Focus

to six months, if I could recollect.

So that was delayed because we had projected revenue; we were supposed to open that station before 2020.

Unfortunately, with COVID, work was delayed, and our projected income for that particular site could not have been attained.

Also, Gambia had the opportunity to host the first international oil and gas conference in this country, the Upstream West Africa conference which should have taken place in June. We were in negotiations with the organizers; everything went well, they had sponsors, but unfortunately, when COVID came in, it had to be put aside, and that would have put the Gambia in the limelight. For the first time, if our small country successfully hosted an international oil and gas conference, it would have opened up avenues for investors, especially for our oil blocks, some of which are yet to be licensed.

“

BP has provided scholarships for master’s programmes in the UK. They’ve also given sponsored biodiversity studies of the Gambian river.

Since we were in a joint venture with BP, we did some corporate social investment with them under that agreement.

More importantly for the upstream side of things, the operators in our blocks FAR and PETRONAS had to push forward an exploratory well drilling as COVID affected drilling and preparatory plans.

So, talking about attracting investment, just like and of course, as a core business.

You know, you’re a business strategist yourself. You’re pursuing strategic regional alliances to promote and attract investment in the country, hydrocarbon industry generally. How would you say that has fared so far in your pursuit to attract investors including strategic regional alliances to promote and attract investment in the hydrocarbon industry? (I would suggest this question be changed to reflect answers given as rephrased above).

Yes, we have done very well.

I witnessed the signing of two licenses. The license was issued to BP, which was very good. The terms and conditions of the license were excellent due to well-structured negotiations. There was no executive interference. It was done purely on professional lines. We agreed with BP and the Honourable Minister and issued a license in 2019.

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Before that, exploration rights were also given to FAR. However, that was amended and extended because, in 2019, FAR farmed out part of their shares to PETRONAS in Malaysia therefore they jointly own the license and currently plan to drill a well.

We were very much excited about BP but due to a change in strategy they are going to be concentrating on low carbon areas. However, BP negotiated their way out very smoothly and amicably and we both ended up proud of each other.

FAR and PETRONAS have plans to undertake exploratory drilling next week for which we have kept fingers crossed.

Right now, plans are afoot to market the block exited by BP. In a licensing process overseen by the Ministry, international oil companies (IOCs) will express interest, and they will go through a fair and transparent process in order to ultimately award it to IOCs that have both technical and financial capacity to execute the necessary work programs. There’s no point in assigning a license to an IOC that keeps on asking for extensions and for that reason we are cautious who we give license to as far as our blocks are concerned.

Another part of our investor attraction strategy is to attend international conferences in oil and gas where we take the opportunity to showcase the potential for the Gambia. For example, two key conferences for us are the MSGBC basin; probably you might have heard about it, Mauritania, Senegal, Gambia, Guinea Bissau Guinea Conakry, every year there is a joint regional summit of these countries with regards to the basin.

There is also the Africa oil week, happening soon between the 8th and 11th November and we will use the opportunity to launch a mini licensing round to market the block that BP exited and also showcase the Gambia’s potential for oil and gas. So yes, there are interested investors, and we will not relent on our efforts; we will go ahead to market the Gambia as far as our oil blocks are concerned, both offshore and onshore. Most of the investors, for now, are concentrating on offshore, that is, deep waters. However, we do also have onshore blocks that are available

Country Focus

and they consist of the entire length and breadth of the Gambia divided into north and south What are some of the attractions and opportunities for ready investors?

Recently, the MSGBC basin has been the focus for investors in oil and gas. There has been a massive discovery in the MauritaniaSenegal border, substantial gas deposits. In Senegal, the Sangomar oil field also found oil and gas and these all sit on the same MSGBC basin, right from Mauritania to Guinea Conakry.

So this is as area of great interest for oil and gas investors as there is enormous potential. Therefore, international investors who have the means are encouraged to come in and explore with us.

The Gambia seems to have an upstart because when you look at the prevailing conditions, most countries wouldn’t have a template to draw from in terms of managing public interest. And managing host communities or managing local content, you seem to have case studies to look at and adapt. What are you doing to develop a robust plan for local content and other significant initiatives to support local companies?

For any license that is being issued, there are terms and conditions for local content and also for CSR. The IOCs that are issued the license or given a minimum to spend on CSR in terms of CSR. Again also, they are given a minimum on local content development. And if it is not spent, they have to refund the government in a cash balance. Like for example, BP, we undertook some CSI, corporate social investment, instead of responsibility, we call investment because we want to have a long-term impact on the lives of your community.

With our partner IOCs we are making great efforts to engage in local communities, as evidenced by our corporate social activities.

We are involved in many wideranging corporate social investment

activities, from youth development programmes in sports to hospital and colonial renovations and donations, gardening and borehole development for women and higher education scholarships. Notably, in some cases, together with our international partners like FAR we’ve renovated the accident and emergency ward in Brikama, which forms part of the highly populated West Coast Region. And we’ve also renovated the maternity wing in Bansang hospital in the Central River Region.

We also contributed about a million dalasi, from our corporation’s funds, to a fundraising initiative for COVID response. We did that last year in 2020. Again, also, we procured some items for the COVID Rehabilitation Centers in Bakau in the Kombo Municipality Council which has been reserved for COVID. BP also has provided scholarships for master’s programmes in the UK. They’ve also given sponsored biodiversity studies of the Gambian river. Since we were in a joint venture with BP, we did some corporate social investment with them under that agreement.

Africa is the largest reservoir of young people.

In The Gambia, the youthful population is 19.9 (the median age). So, you have a lot of young people, and we all agree that the oil and gas industry is very expert-driven, and you need to gather a lot of experience. How are you engaging the young people trying to attract much more young people to the sector?

Perfectly put. Looking at our staff and composition, more than 60% of the team are below 30 years, and some are fresh from universities.

For example, our recent recruitment for the E&P, the exploration and production department, which we call upstream, were all young graduates very talented in mathematics, geosciences and engineering. Currently we are planning to send them for further studies.

Each year, we have a training plan, and we look at our areas of focus and interests and ask department heads to recommend training for places where they feel there’s a capacity gap which has been helping.

Also, in our downstream, we recently recruited very young people, most of them in their 20s, including university graduates. We are very much concerned about staff training. One of mandatory IOC contributions are called Training and Resources funds.

These are not only used to train within the Ministry and GNPC but also other government departments in relevant areas. So, we are keen on training and will continue to embrace training and recruitment among the young and talented graduates we’ve got; that’s the only way you can grow. If you want to develop an institution, you don’t recruit people at your level; you don’t recruit people who have the same IQ; you look at those with higher IQs. And that is the way to move the institution forward. That is our strategy.

Anytime we’re recruiting, my advice to department heads is to recruit talented young people; this is what can take our institution forward. And that’s what we are doing.

Can you share your plans for the future of the GNPC? (Suggest to rephrase to match the answer given; what are your plans for the future or What is next for you after GNPC) Once I leave here, I would want to retire, probably engage in community service with NGOs. You know I don’t think I want to take an active role in oil and gas again, because number one, I have worked in the banking industry where I retired honorably, I came here, and the good thing is that I’m able to lift this institution from where it was. So what I want to do in the future is actually enjoy a little bit of my retirement and engage in community service.

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Petroleum

Oil Rig in The Yard at Apapa, Port of Lagos, Nigeria.

By Omowumi Iledare

N

igeria’s journey to the Petroleum Industry Act started in 2000s under President Olusegun Obasanjo, who inaugurated an oil and gas sector reform implementation committee.

The committee’s report formed the basis of the first Petroleum Industry Bill eight years later.

It was submitted to the National Assembly but not passed. Nor was it passed under the next president, Goodluck Jonathan.

President Muhammadu Buhari also declined assent to it in 2018 because of some provisions. It was finally passed by the National Assembly on 1 July 2021 and signed into law by Buhari.

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Petroleum

Why is the act important?

The main objectives of the Petroleum Industry Act are to: •

define the relationship between the society and investors,

•

determine how costs are recovered and profits shared among stakeholders,

•

establish an innovative mechanism to fund petroleum host communities directly through trust funds,

•

improve transparency and accountability in the oil and gas business and reduce overlapping in the roles of governance,

•

create regulatory and policy institutions, and

•

create a conducive environment to enhance the mutual benefit of petroleum operations in Nigeria.

The act is key to expanding the fortunes of Nigeria’s petroleum industry. It stands to remove the uncertainty that has led to a significant reduction in investment in exploration and production.

What improvements should Nigeria expect to the petroleum industry?

If properly implemented, the state-owned Nigerian National Petroleum Corporation will be purely commercial with the intention of maximizing its return on investment. At the moment the national oil company is encumbered with having the role of an agency and less focus on making money for stakeholders.

Hence it has not declared any profits since inception in 1977.

The act also attempts to address the development of host communities. It sets out how a new fund will be created and defines precisely how it will be managed and used. This is quite unlike previous federal interventions such as the Derivation Fund and the Niger Delta Development Commission. All failed to make an impact on host communities.

The act isn’t perfect. But if implemented well, with apolitical and competent board members, it will make Nigeria’s petroleum industry as competitive and attractive to investors as its peers.

There have been objections to two major provisions of the act. Why? There has been a lot of angry debate about the provision that a 30% share of Nigerian National Petroleum Commission profit should be set aside for frontier exploration and 3% contributed to trust funds for host communities.

The fund for host communities is to mitigate the impact of oil exploration while the 30% share is for frontier exploration in the inland basins. The inland basins consist of the Anambra basin, the lower, middle, and upper Benue trough, the southeastern sector of the Chad basin, the midNiger (Bida) basin, and the Sokoto basin.

It is very disappointing that people are misrepresenting these two provisions as a North versus South transfer payment. This is misinformation peddling.

The debate has become heated because the 3% is being compared to the 30% even though they have no bearing on one another. The two provisions are basically apples and oranges and no meaning can be derived by comparing them.

Each must be evaluated on its own merit without making reference to the other. Neither is dependent on the other.

if confronted with unlimited expectations and wants by its stakeholder? Government is a risk averse investor. Exploration of frontier basins is a risk seeker investor’s domain. The other tiers of government have legitimate reasons to be concerned with the likelihood of dedicating a chunk of federation fund to invest in highly uncertain business ventures.

Frontier exploration outcomes are classic examples of such ventures.

The follow-up question is, assuming this 30% allocation is lawful, is it beneficial or expedient enough to overcome the cost to the federation? The answer is conjectural.

Will the price of fuel go up?

What about the subsidy regime for petroleum industry?

The fear is real. But society will not be worse off. The price system protects consumers and sellers equitably.

The role of the price system is to balance supply and demand in a way that consumer and producer surpluses are optimized. It also allocates resources efficiently, if government intervention is limited.

Think about this for a moment.

There is no country in West Africa with a lower price for petrol than Nigeria.

In Ghana it is $1.09 per litre and in Nigeria $0.41. Nigeria is the sixth cheapest in the world. Even prices in Saudi Arabia, capped at $0.62 per litre, are higher and yet they have functioning refineries.

I agree with critics who argue that the 3% isn’t enough for the sustainable development of petroleum host communities. And alternative sources of funding should be identified. There are plausible reasons to change this provision.

There’s another way of looking at this that invites a rethink. Is the proportion of Nigeria’s budget that is spent annually on subsidizing petroleum really a transfer payment to the poor per se, or to a segment of the society trading in petroleum products?

I also agree that the legitimacy of allocating the 30% to a liability company is debatable. Only the court can establish that, based on the law governing federation account allocation. Other legitimate questions remain.

Over the last 10 years, the Nigerian government spent N10.7 trillion ($26 billion) on fuel subsidies. It spent N750 billion ($1.82 billion) in 2019.

First, would a risk averse investor use their limited fund

These price controls have created significant social welfare losses – poor schools, poor road infrastructure, poor health

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the act’s fiscals are favorable to domestic gas use. Such a framework is well disposed to developing the huge proved and natural gas reserves discovered, accidentally, while looking for liquid petroleum.

The new act will decontrol product prices in the downstream and eliminate subsidy payment to traders. It has also disavowed a guaranteed margin to short term traders in the downstream oil and gas sector. It creates efficacy, market efficiency and intergenerational equity in the sector by optimizing consumer surplus and producer surplus with minimal if not zero welfare losses.

However, there is certainly a need for a technical committee to lay out the optimal response strategy to energy transition dynamics.

Nigeria must continue to talk the energy transiting talk and I remain convinced that it must walk its talk strategically at a pace that supports its access to affordable energy goals.

Shouldn’t Nigeria be preparing for a post-petroleum world?

To a large extent the act is in sync with that in the sense that it sets out goals for natural gas developments. Natural gas is a legitimate transition fuel and www.africaenergyandinfrastructure.com | 32

“

The role of the price system is to balance supply and demand in a way that consumer and producer surpluses are optimized.

It also allocates resources efficiently, if government intervention is limited.

Think about this for a moment. There is no country in West Africa with a lower price for petrol than Nigeria.

“

infrastructure. Price controls of petroleum products shut out investors in the downstream and on and on over the years. The society is better off with an optimal price strategy for a scarce resource like petroleum.

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Senegal’s Petroleum Code:

Promoting Local Content, State Ownership of Hydrocarbon Resources, and Environmental Sustainability

By Miguel Artacho

S

enegal adopted a new Petroleum Code on January 24, 2019, which aims to reinforce the preservation of national interests and local content.

The new code goes significantly beyond the legislator’s concerns about local content included in the previous 1998 code, by devoting new provisions and making local content mandatory and subject to specific conditions.

It advocates for the participation of the national private sector in oil operations, as well as all contracts for the construction, supply and supply of services relating to petroleum operations.

The new text also includes an obligation for technology transfer to Senegalese companies and imposes an obligation on holders

of exclusive exploitation licenses to allocate, as a matter of priority, their exploitation products to cover the needs of the country’s domestic consumption. Furthermore, Senegal has put in place a specific new institution– the Institut National du Pétrole et du Gaz (INPG) – which works under the umbrella of COS-PETROGAZ and the Presidency in order to promote the development of local content in every step of the value chain in Senegal´s rapidly emerging oil & gas sector.

It includes several key points and highlights that royalties are calculated on gross production and the Société des Pétroles du Sénégal (PETROSEN) has a 10% stake in all contracts, which can

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be increased to 40% in specific situations. PETROSEN has to participate in project expenditure in the say way as other operating companies active in Senegal.

According the Petroleum Code no tax holiday can be applied and international companies will have to take account several local content policies.

Senegal’s new Petroleum Code also has also significantly revamped legislation in order to ensure that the development of the country’s hydrocarbon resources is done in manner that ensures the long-term protection of the environment.

Now, the obligations of the hydrocarbons title holder are reinforced with express reference to the Environment Code and

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the allocation of costs to the investor relating to environmental protection. The investor remains specifically bound to provide a bond in a financial institution for the rehabilitation and restoration of the sites under the conditions set in the oil contract.

Another of the single most important aspects of the new Petroleum Code is in relationship to the ownership of hydrocarbon resources. Ownership of petroleum resources belongs directly to the people of Senegal.

This provision is in line with the provisions of Article 25 (1) of the Constitution, which recognizes the people, and not the State, as the owners of these resources. In addition, the code lays down the principle of managing oil revenues, which must take into account the interests of future generations and current socio-economic needs. A specific law for the management of petroleum revenues is provided for this purpose.

The code expressly provides for the Ministry of Petroleum and

Energy and PETROSEN as the main governmental bodies responsible for implementation of the hydrocarbons policy and as the institution promoting the national sedimentary basin and otherwise representing the interests of the State in the hydrocarbon sector, respectively.

In addition to the new Petroleum Code, on the diplomatic front Senegal has worked with neighboring countries in the region, and most notably with Mauritania since the Grande Tortue Ahmeyim (GTA) gas project is located on the border between Senegal’s offshore waters and those of Mauritania. The two countries are now working closely together for the development of this flagship project that is set to transform the economies and energy sector of the two countries over the course of the next decade, by providing energy independence and boosting the availability of more competitively priced natural gas, which should be a boon to a wide range of energy-intensive industries from

cement, the metallurgical industry, and manufacturing, among many others. Along with the approval of an interstate cooperation agreement signed with Mauritania in 2019, the adoption of the Petroleum Code is yet another sign of Senegal’s commitment to developing its highly prospective hydrocarbons sector, which is forecast to begin large-scale oil and gas production from various projects over the course of 2023.

Thanks to the various innovations put in place under Senegal’s new Petroleum Code the country has ensured that the normative framework overcomes the shortcomings of the previous 1998 legislation and ensures that Senegal is particularly well positioned to become one of West Africa’s major oil and gas producing countries; and that there is clear framework to facilitate FDI into the energy sector as well as the crucial guidelines that international operators need to operate effectively and meet their respective obligations to the State of Senegal.

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It’s Mixed Fortunes Over Rising Crude Price

By Taofik Salako, And Muyiwa Lucas.

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ising oil price improves the prospects of Nigeria’s budget implementation but it may also stoke inflation and increased hardship on the average Nigerian, in a delicate balancing for a country whose major export is crude oil and import is refined petroleum products.

Oil prices spiralled to three-year high above $85 per barrel at the weekend, driven by supply deficit

forecasts and expected increase in demand over the next few months.

The economy is heavily dependent on the oil sector, which accounts for over 95 per cent of export earnings and about 40 per cent of government revenues. Recent data showed that the Nigeria’s oil sector contributed about nine per cent to the country’s Gross Domestic Product (GDP).

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The International Energy Agency has said energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd), which could result in a supply gap of around 700,000 bpd through the end of this year, until the Organisation (OPEC) of the Petroleum Countries and allies, together called OPEC+, add more supply, as planned in January 2022.

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Experts agreed at the weekend that the global oil situation presents a mixed-fortune for Nigeria with the expected gains in higher expert earnings counterbalance by downside risks to the domestic economy, which also depends heavily on petroleum importation.

The Central Bank of Nigeria (CBN) stated that Nigeria spends almost 40 per cent of its foreign exchange (forex) earnings on importation of petroleum products and petrochemicals.

Finance and economic analysts at the weekend pointed out the subtle threat of imported inflation due to weak currency and rising consumer prices, despite the continuing decline in inflation rate.

The National Bureau of Statistics (NBS) at the weekend released its September 2021 Consumer Price Index (CPI) showing that headline inflation rate moderated for the sixth consecutive month to 16.6 per cent last month as against 17.01 per cent in August, this year.

The decline in the headline inflation rate was meanwhile driven by 74 basis points decline in food inflation rate to 19.6 per cent.

A month-on-month breakdown however showed that headline inflation rate inched up by 13 basis points from 1.02 per cent in August to 1.15 per cent last month.

The positive global outlook for crude oil reinforces Nigeria’s medium term expenditure and economic development plan.

Nigeria’s 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), which provide the framework for yearly budgets, pegged daily crude oil production at 1.88mbpd; 2.23mbpd and 2.22mbpd for 2022, 2023 and 2024 respectively. The benchmark crude oil price for national planning is set conservatively at around at $57 per barrel, providing headroom for excess crude accounts.

Senior Research Analyst, FXTM, Mr. Lukman Otunuga, said the explosive appreciation in oil is double-edged as bad news for energy consumers and a welcome development for energyproducing countries. But in the case of Nigeria, it comes with a

complication as government fixes the price of gasoline for consumers below the international prices and uses its own funds to pay for the difference.

“One thing to keep in mind is that Nigeria exports crude by imports all by-products of the resource, including the most premium motor spirit. With Africa’s largest economy consuming more than its refineries can produce, it depends heavily on importation for its energy needs which has recently jumped to over 70 million litres per day.

“Ironically, rising international oil prices will put more pressure on the country’s foreign exchange while the revenues from oil sales may be drained by the fuel subsidies. According to data from the Nigerian National Petroleum Corporation (NNPC), the cost of petrol subsidies may hit N1 trillion by December if oil prices continue to rally. This will impact the government’s ability to fulfil its financial obligations and may even impact the recently approved 2022 budget,” Otunuga said.

According to him, higher petrol prices have fueled fears over rising inflation which could hit disposable income and impact economic growth.

“The horrible combination of rising inflation and slowing growth continues to fan concerns over stagflation. Removing fuel subsidies is likely to expose Nigeria to such risks. Another question is the socioeconomic consequences of such a move. If Nigeria had a chance to remove the subsidies, this could have been when oil prices trading at record lows last year. Fast forward today, oil bulls are on a tear with the fundamentals propelling prices towards $100 – a level not seen since 2014. To remove the subsidies now, may result in spiralling inflation but keeping them active continues to drain the government coffers,” Otunuga added.

energy commodities-noticeably, diesel and gas, and renewed pressure on the exchange rate”.

Cowry Asset Management Limited had noted that the “sustained rise in month-on-month inflation was partly due to sustained foreign exchange volatility; thus impacting input costs of businesses which was passed onto consumers in the form of higher selling prices”.

“Hence, we feel that annual inflaition rate may rise in the coming months, especially during the festive season, although to a limited extent due to expected increase in food supply on account of the ongoing harvest season,” Cowry Asset stated.

Analysts at Cordros Capital said while they expected food prices to moderate this month, given the impact of the primary harvest season, the impact of currency weakening and higher transportation costs may stoke upward pressures in the core basket.

“Accordingly, we look for monthon-month headline inflation reading of 1.27 per cent in October, with the high base effect from the corresponding period of 2020 translating to 30 basis points moderation in yearly headline inflation to 16.32 per cent,” Cordros Capital stated.

Bismarck Rewane’s Financial Derivatives Company (FDC) stated that the principal inflation moderating factor was the base year effects, pointing out that a notable trend however was that core inflation-inflation less seasonalities increased by 0.33 per cent to 13.74 per cent while month-on-month inflation also increased. ing sold at N350 per litre and commodity prices are surging?

When will the domestic inflation rate finally reach an inflection point? These are some of the pertinent questions on the mind of most analysts and investors,” FDC stated.

Analysts at Afrinvest Securities at the weekend said though they expected the headline inflation rate to further moderate this month to 16.0 per cent on high base-year effect, “risks to the outlook include further increase in the cost of www.africaenergyandinfrastructure.com | 37

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Nigerian Content Development Board, dialogues with AEI on developments in Nigeria’s Oil Industry www.africaenergyandinfrastructure.com | 38

Since inception, NCDMB has been committed to building local capabilities in the Nigerian Oil and Gas Industry, which has become a model for SubSaharan Africa.

Conversations highlighted the MOU between NCDMB and the Bank of Industry Limited (BOI) on the implementation of Nigerian Content Intervention Fund (NCIF), which aims to address the persistent funding challenge encountered by local service and other indigenous players, The floating Production Storage and Offloading (FPSO), first of its kind in Nigeria, amongst other subjects.

How should Africa’s new oil producers approach local content, considering that skills and operational expertise play a significant role in the industry?

Specific parameters are necessary for sustainable Local Content implementation in any country. They include; •

Gap analysis of the industry,

•

Capacity building,

•

Regulatory framework,

•

Funding & incentives

•

Research and Development.

In the last four decades, the number of African Countries producing oil has increased rapidly. The Discovery Oil is genuinely crude when it is seen as a commodity.

There is a need to transform the crude nature of oil into several value chains that inevitably keep the economy busy.

A barrel of oil utilized as a resource generates multiple products used in transportation, construction, aviation, agriculture, etc.

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One of the agency’s mandate is to monitor Nigerian content compliance by operators and services providers. How can you perform this function, considering the near absence of data and other accountability instruments, which is often the case in most sectors in the country?

Once this philosophy is embedded in the psyche of any nation, it drives the policies, laws, resource allocation, educational curriculum, and development plan of such countries.

Prior to the operationalization of the Nigeria Oil and Gas Industry Content Development Act of 2010, which gave birth to NCDMB, there was little or no in-country value retention in the oil and gas sector.

However, a recent survey has shown that the diligent implementation of this Act, under your leadership, has led to a change in the trend. Can you share some of the major successes from the active implementation of the Act? Since its inception in 2010, the Act’s Implementation has resulted in more than 35% of in-country value retention compared to the less than 5% value retention before the NOGICD Act. Before the Act, we had an annual spend of $20 billion with little or nothing retained incountry. Today, I can confidently say that we spend over $6 billion in-country per year. We have two world-class pipe mills and five impressive pipe coating yards. We have also recorded the following milestones since Over 50,000 direct jobs have been created on the back of the implementation of the Act. Nigeria’s indigenous operators are responsible for 15% of our oil production and 60% of our domestic gas supply.

In fabrication, today, Nigeria can handle the fabrication of more than 250,000 tonnes per year.

In cable manufacturing, all cables required in the oil and gas sector are all manufactured in-country.

“

In the last four decades, the number of African Countries producing oil has increased rapidly.

The Discovery Oil is genuinely crude when it is seen as a commodity.

“

T

he Team met with The Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr.

Simbi Wabote, in his office.

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Over ten (10) million training man hours have been delivered via our Human Capacity Development Programs. No surprise that our indigenous workforce could sustain oil production at the peak of the COVID-19 pandemic lockdown.

enablers, namely:

Last year, the agency marked its 10th anniversary with a slew of short-term achievements. Your leadership has also got aneye on achieving 70% of the Nigerian content target by 2027. What are some of your strategies towards achieving this target?

Under each pillar and enabler, we mapped a few initiatives directly to them. These initiatives were categorized under short-term, medium-term initiatives and longterm Initiatives.

It was indeed a bitter-sweet moment for the Board to mark its decade of Local Content practice in April 2020, right in the middle of a global pandemic. Five pillars, namely: 1. Drive our 10-year Strategic Roadmap) Technical Capability Development 2. Compliance and Enforcement, 3. Enabling Business Environment, 4. Organization Capability and 5. Sectoral and Regional Market Linkage.

•

Funding,

•

Regulatory Environment,

•

Collaboration and

•

Stakeholder Engagement, and Research

As we deliver these initiatives, we increase our achievement of the roadmap.

The initiatives are mapped into the annual scorecards of the Directorates within the Board, and we have a Project Management Office (PMO) to track performance quarterly.

Some of the initiatives completed since the launch of the Strategic Roadmap in early 2018 include the following: Completion of 10MW power plant for supply of electricity to our new headquarters building and the industrial park in Bayelsa State,

Completion and commissioning of our 17-storey headquarters www.africaenergyandinfrastructure.com | 40

The pillars are supported by four (4)

building complete with a 1,000seat auditorium and multi-level car park, Completion of 10MW power plant for supply of electricity to our new headquarters building and the industrial park in Bayelsa State, Launch of the $200million Nigerian Content Intervention fund recently increased to $350million with additional products for Working Capital and Women in Oil and Gas, Forensic Audit of NCDF Remittances with the recoveries close to $100million, we have successfully exited appropriation since 2018, and we intend to maintain our self-funding status through the prudent management of the Nigerian Content Development Fund entrusted in our care, the only infrastructure in Africa for FPSO integration is available in Nigeria. The Egina FPSO, which is the largest globally, was integrated into the SHI-MCI yard in Lagos.

Your achievements thus far have undoubtedly become a model for other countries looking to pursue strategic local content development in various countries on the

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continent. How in your view can countries in Africa develop fair and balanced local content policies that create economic opportunities for Africans without overly burdening foreign investors, thereby discouraging them from operating the region?

How should Africa’s new oil producers approach local content, considering that skills and operational expertise play a significant role in the industry?

Specific parameters are necessary for sustainable Local Content implementation in any country.

They include

“

A regulatory framework should then be put in place to provide clarity, enhance investors’ participation, and channel resources to the priority areas.

A workable funding model must be in place. This differs from country to country; the Nigerian model is different from that of Brazil or Norway. The funding pool will enable the delivery of capacity building initiatives and home- grown R&D.

•

Gap analysis of the industry,

•

Capacity building,

•

Regulatory framework,

•

Funding & incentives, and

•

Research and development.

discouraging them from operating?

Specific parameters are necessary for sustainable Local Content implementation in any country, they include: •

Gap analysis of the industry,

•

Capacity building,

•

Regulatory framework,

•

Funding & incentives, and

•

Research and development.

African countries must carry out a gap analysis to establish the peculiarities of their environment and prioritize focus areas such as education, infrastructure development, employment, supply chain development, etc.

A regulatory framework should then be put in place to provide clarity, enhance investors’ participation, and channel resources to the priority areas.

African countries must carry out a gap analysis to establish the peculiarities of their environment and prioritize focus areas such as education, infrastructure development, employment, supply chain development, etc.

A regulatory framework should then be put in place to provide clarity, enhance investors’ participation, and channel resources to the priority areas.

A workable funding model must be in place. This differs from country to country; the Nigerian model is different from that of Brazil or Norway. The funding pool will enable the delivery of capacity building initiatives and homegrown R&D. Your achievements thus far have undoubtedly become a model for other countries looking to pursue strategic local content development in various countries on the continent. How in your view can countries in Africa develop fair and balanced local content policies that create economic opportunities for Africans without overly burdening foreign investors, thereby

A workable funding model must be in place. This differs from country to country; the Nigerian model is different from that of Brazil or Norway. The funding pool will enable the delivery of capacity building initiatives and homegrown R&D.

You have emerged winner of the African Local Content Icon award; what specific message would you like to share with Africans as the reigning champion?

Firstly, let me express my appreciation to the organizers of the Award and the various people that voted for me to emerge as the African Local Content Icon. My team and I are delighted that our contributions are recognized across the African continent and beyond.

I want to challenge African oilproducing countries to collaborate closely, especially around Local Content development. This is immensely imperative, especially with the push for energy transition and its impact on our economies.

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The Prospect of Easier Intra-Africa Trade is Boosting Investments in Transport and Logistics

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A

frica’s transport and logistics start-ups are on track to raise more growth funds this year, in deals that could help ignite intra-Africa trade.

Since the outbreak of the Covid-19, there has been a rising shift towards tech-enabled transportation across the continent to overcome movement restrictions, improve efficiencies and grow food chain resilience. The wider growth of e-commerce in Africa during the pandemic has also created fresh demand in the logistics sector, sparking a rise in last-mile delivery apps for food and other goods.

Baobab Network, a social impact technology accelerator, shows that the transport and logistics sector is staring at a startup fund-raising record, following a year in which it raised $217 million.

Over the last eight months alone, the sector has already raised funding worth $200 million.

“Transport and logistics companies are still on track for their best year yet in terms of value raised.

This year, transport and logistics companies in Africa have secured $200.77 million over 37 funding rounds,” says Baobab’s transport and logistics sector map 2021.

Of the 37 funding rounds, the majority, 62% are either seed or pre-seed funding rounds, with

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values averaging $50,000.

Togo’s Gozem and Nigeria’s SEND technologies) were two techenabled west African logistic firms that raised over $3 million, while Egypt’s on-demand warehousing and logistics platform, Flextock raised $3.25 million in a pre-seed funding round as the North African country saw increased activity in the sector.

MAGNiTT, a startup data platform for emerging venture markets in Middle East and North Africa, affirms it has been a good year for Egypt with the country breaking its quarterly and halfyearly records in venture capital funding. The country’s start-up funding in the first half of the year was equivalent to 91% of all funds raised in 2020, with a year-on-year growth of 28%.

“Out of the top 3 most-funded geographies in MENA, Egypt was the only one to witness an increase in deal volume YoY reflecting a healthy startup space and capital allocation,” according to MAGNiTT Since the beginning of the year, seven Egypt-based delivery and logistics startups have raised $42 million in funds.

Baobab network puts the number of Africa’s transport and logistics start-ups at over 430 with 65% founded during or after 2017 with

the value range of funding for these startups seen rising beyond $10 million.

“We see investments in the 10M+ range have greatly increased this year, accounting for almost 30 per cent of the investments,” according to the report.

This points to growing investor attraction to this space, possibly to tap into the world’s single largest market-AfCFTA. Nigeria’s mobility startup, Moove, recorded a big raise after closing $40 million in a debt financing round in May and $23.2 million in a Series A funding round in August.

“It has already been a record year for transport and logistics companies in Africa, with 4 months left to go in 2021. Will funding continue to flow in as the year wraps?” according to Baobab Network.

Pending deals in the more mature transport and logistics market include a July offer by UAE port operator, DP World to acquire South Africa’s listed firm, Imperial Logistics for $890 million.

DP World and other logistics companies like South Africa’s Grindrod are also looking to benefit from private participation in a number of South Africa’s harbor operations.

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Supporting Italian manufacturing companies in SubSahara Africa:

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World In Your Hands partners African Leadership Group

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F

ore-most Italian consulting firm, World in Your Hands - WiNH, signed a partnership agreement with African Leadership Group, and Africa Energy and Infrastructure Publication, to support Italian manufacturing companies seeking entry into Sub-Sahara Africa.

In Founding Partner, Stefano Boldorini, in a statement, affirmed that; the agreement will expand their partnership and funding for Italian manufacturing driven projects in Africa. ‘’Manufacturing is one of the most viable avenues for propelling economic development in Africa, and holds the potentials of aiding the continent navigate the path to recovery, post-pandemic. Experts project that the sector could hit 666.4 billion dollars by 2030, which is over $200 billion more than it did in 2015.

I am excited with the partnership and look forward to contributing to the ongoing expansion of Africa’s Manufacturing sector’’, He concluded.

According to the Director of Energy Operations at Africa Energy and Infrastructure Publication, ‘’the partnership reflects excellent mutual relations and shared priorities between both Companies, premised on economic development for subSaharan Africa.

AEI appreciates the commitment of WiNH in the deployment of economically stimulating manufacturing instruments, with a broad strategy on Africa’s emerging markets.

I am confident about having the AEI utilize it’s world class expertise, in boosting Italian Manufacturing and further amplify Trade and Investment relations between both regions’’, She concluded.

The editor of Africa Energy and infrastructure publication, Wofai Samuel expressed satisfaction with the development, stating that, ‘’their choice for

the manufacturing sector, is a demonstration of the company’s expertise and dedication to economically viable sectors in Africa, referencing WiNH’s relationship with the association of confederation which provides all parties with an edge’’.

AEI’s Editor, Wofai Samuel, had an interview with the Founder and Managing Partner of WiNH, Stefano Boldorini, on his internationalization of Italian brands (‘Made in Italy’) towards African markets, which he affirmed was informed

by WiNH’s focus on cross border activities between Italy and some of the most relevant emerging market, namely India, MENA Region, China and AFRICA as it’s latest addition.

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Excerpts below.

Share with us, the success and accomplishments of WINH, as one of Italy’s leading consulting firm, focused on cross border activities in some of Asia’s largest markets.

It is hard to summarize the amount of work done till now; several clients have also asked us to keep the joint operations reserved. In any case, let me put it in this way: since day one we have been targeting what we perceive to be among the most relevant markets for the future in Asia (India, China, GCC) and where trade between Italy and those countries was below expectations.

Think e.g. about the fact that, at present, India plus China (approx.

2.8 billion people and 40% of mankind) trade weights for Italian balance no more than 5% of the total export. And Italy is the second largest manufacturing hub in Europe after Germany…

Stefano Boldorini’s Profile: Founder and Managing Director, WINH; Stefano has an in-depth experience in marketing and commercials, having held top/directorship roles in highly innovative sectors, including; Telecommunications, strategic design, internationalization of enterprises, designing innovative business models (e-commerce, cloud computing, application service provisioning, mobile broadband, mobile virtual network operators, social media, customer care, entry strategy on emerging markets) for start-ups.

Our target companies in Italy are SMEs; to properly operate At present, his main focus Winh has created a broad is on cross-border business network of partners in Italy and consultancy through WINH in those countries (Associations, and it’s Associates globally.

Federations, professionals, consulting companies, diplomats, institutions, companies of different www.africaenergyandinfrastructure.com | 47

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Finally, one of our main objectives for the next years is to increase the amount of operations (distribution plus extraordinary operations) from these markets to Italy/Europe.

What are the full ranges of strategic consulting services, WINH offers to it’s clienteles’ in Europe & Asia?

We could summarize these services in: Direct ones: market research, business modelling, partners/ targets research for distribution/ extraordinary operations, negotiation, local key accounting activities, deputy county management, and personnel research.

Indirect ones: legal/fiscal/custom, through our selected local partners.

Experience doing business & Bilateral Trade in various regions All our local partners in the various countries, and WiNH plus its network in Italy, have a proven background of excellence and a strong reliability among stakeholders.

All our partners have a top level experiences in their professional fields (e.g. CEO, CCO, etc.) and are recognized by their respective sectors. That’s how we build and maintain our network with institutions, diplomats, top level brands etc. And most of all, this is the only way we feel operations could lead to success: all the chain must be safe and excellent: best products, best companies in their own scale, fields and countries, best reliable people, support for the ecosystem in each country. If any of these ingredients is missing, the success rate is at high risk. www.africaenergyandinfrastructure.com | 48

Provide us a better understanding into your attraction to the African market.

In Italy still a small number of SMEs is aware of the enormous potential of the African market.

Many of them have few information, no support on the ground, and low cultural capability to face what is the renaissance of the whole continent, already on the way. That’s the reason for which we have decided to search for trusted partners able to support our Italian clients to enter the African market.

Clearly, we will have to do an initial selection among sectors of our clients/prospects, and prioritize some of the African Countries.

WINH’s Perspective on Africa’s business environment Europe and USA are the continent of “today’s world”, we can say. Asia and Africa are the continent of “tomorrow’s world”, and according to all indicators in Africa there is a dynamism which is unprecedented.

Very good local companies are rising, democracy - compared with sometime back - is spreading, business practices are dramatically improving. That’s way if a company wants to secure its own future, it has to know and work with selected African markets.

What strategies can be implemented to further strengthen trade offerings and services between Italy and countries within the African continent?

It is not easy to answer; let me say that first of all a strong activity of mutual knowledge(understanding among our markets and companies is the key. Especially for Italian SMEs, which in average could know less African markets respect to other European Countries, China, India, etc. I feel that governments, trade agencies, chambers of commerce, consulting companies shall lead the way.

“

In Italy still a small number of SMEs are aware of the enormous potential of the African market.

Many of them have little information, no support on the ground, and low cultural capability to face what is the renaissance of the whole continent, already on the way. That’s the reason for which we have decided to search for trusted partners able to support our Italian clients to enter the African market.

“

sizes etc.) who has allowed approx. n° 50 successful operations from the foundation of Winh in end of year 2015. Last but not the least, our operational model always starts from a support in the cultural approach, before than any business model or any operational activity.

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Italy has been showing a renewed interest in Africa lately, as the continent continues to attract foreign direct investment (FDI) globally.

We can confirm this, from our side also. Italy has a strong export (approx. 500 billion euro) but still a lack in effectiveness when has to approach new opportunities out of its “comfort zone”; this Is true most of all for SMEs. But now, the dice is finally thrown and many trade mission are being organized by our government, as well as independently by companies.

Important sectors your company looks to engage in bi-lateral trade services within Africa?

We would say: mechanical products (food processing, oil&gas), construction and furniture to start with.

What would you say is the state of bilateral relations between Italy and Africa economically?

Italy is a State, part of a continent, EU. Africa it is a continent with more that 1 billion inhabitants.

Nevertheless, according to macro figures we can see that EU still remain the main market for Africa in terms of export as well as in terms of import. In those terms, by the way, Africa from 2010 to 2020 has seen a switch in terms of having a surplus instead of a deficit with EU. On the other hands, the level of trade between EU and Africa have not seen significant jump. Italy is one of the main partner of Africa, among EU, also in terms of FDI. At the end of 2019-beginning of 2020, Italy was the 6th largest investor in Africa (approx. 30 billion euro, source The African Report) mainly due to its EPCs and O&G giants, while with pandemic these figures could be reduced. But there is still a lot to do for SMEs…

with a selected marked/player, distribution etc.

What policies will you like to see in place to ease Return on your investments Our target companies, Italian SMEs (say from 20 to 200 million euro turnover) have less possibilities for a long term pay-back; although we know that entering emerging markets requires a certain patience and vision. We will therefore need to support the accurate identification of a sustainable business model, with a mix of resources to invest secured partially by our government as well (ideally) thanks to the strong policies created in this sense during the last few years, supporting them with export insurance tools, and selecting the ideal partners/counterparts over the identified territories.

Are there any projects or programs that you will be working on with ALM group for Africa? What are these programs and what do they aim to achieve?

Italy is the seventh-biggest exporter to Africa of all countries in the World Trade Organization (WTO).

What are your expectations on the relationship between ALM, AEI and in extension to Africa?

We would give definitely the priority to Oil & Gas projects as well as to food processing projects.

We would be supported by main Italian federations and associations and this would make the difference in selecting the appropriate companies, being part to local fairs, events, etc.

What do you think is the appetite or interest of your home-country investors for investing and seeking business opportunities in Africa?

Again, being our target mainly SMEs, investing in proper FDI in 80% of the cases will be the final process of a knowledge activity starting with interactions together

In certain cases, e.g. with special economic zones opportunities or local content requirements or specific identified local partners, FDI process for JV creation etc. could be accelerated.

Many large Italian companies have little or no presence in Africa. Major reasons for the lack of a more significant Italian corporate presence in Africa are the misinformation and biases that continue to color perceptions about the continent, how can this be corrected?

There is in fact an apparent paradox: the “small” Italy, without strong connections In Africa compared to other EU companies or China, India etc. is among the top investors in Africa. These investments are nevertheless made mostly by large companies; we would suggest a strong campaign to be made first of all by Italian government to illustrate the tremendous opportunities and the “new” African renaissance, towards the SMEs which are the real backbone of Italian manufacturing ecosystem. Therefore, also similar campaign to be put in place by largest growing African markets.

We feel that also in person meeting and fairs, despite covid and when possible – will support by creating the suitable level of confidence and personal trust.

Concluding statement.

It is a true honor for Winh to start our collaboration with you, to improve not only business among our respective areas but most of all participating to the creation of a more integrated and globally affluent wise world.

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Sustainability

The Green Spaces Divide In African Cities

By Catherine K. Musuva

A

frica is home to some of the fastest growing cities in the world today. According to the World Bank, cities are home to over half of the world's population and more than a billion people live in slums. The United Nations estimates that cities produce over 70% of greenhouse emissions.

Cities are particularly vulnerable to climate shocks and natural disasters. Indeed, urban areas have arguably been hit hardest by the

COVID-19 pandemic which has adversely impacted various facets of city life.

The reduced mobility and home confinement brought about by lockdowns and curfews led to an increase in mental health issues and created an acute urge to be outdoors. Spending time in well-ventilated spaces and uncrowded environments was also recommended by scientists as way to curb the spread of the

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coronavirus. Therefore, city dwellers sought refuge in their home gardens, verandas and in nature. However, there are very few green spaces in the built urban environment in most African cities. Only a privileged few have private gardens or green balconies. The vast majority of the urban population live in slums where vegetation is a rare sight. Public recreational areas are scarce and only a few of them

Sustainability

are well maintained and safe. The pandemic therefore highlighted the intrinsic value of green spaces in the urban environment. At the same time, it exposed the green divide demonstrated by the unequal distribution of and access to urban nature.

Green spaces provide a natural environment within cities. They are associated with better health, wellbeing and active lifestyles among the population as they provide opportunities for play, walking and other physical exercise. Parks and recreational areas also offer city dwellers a welcome respite from the stresses of urban life. Beyond this, they are also rich in natural biodiversity and are important ecosystems. Thus, they play a vital role in stabilising a city's climate and hydrology. Research has enumerated the following numerous benefits of human exposure to natural environments: "lower probabilities of cardiovascular disease, obesity, diabetes, asthma hospitalisation, mental distress, and ultimately mortality, among adults; and lower risks of obesity and myopia in children. Greater quantities of neighbourhood nature are also associated with better self-reported health, and subjective well-being in adults, and improved birth outcomes, and cognitive development, in children" (White, M.P., Alcock, I., Grellier, J. et al., 2019).

Urbanisation has endangered green spaces. More than a century ago, Nairobi was a large swamp surrounded by open grassland and forests before it became Kenya's capital. As it rapidly transformed into East Africa's largest metropolis, Nairobi was fondly dubbed “the green city in the sun”. But not anymore. Like in many African cities trees, forests and parks have given way to concrete and slums.

Urban development is narrowly viewed in terms of increasing the built environment at the expense of nature. Greedy developers have constructed crowded residential units without consideration for green areas in order to maximise profits. There are hardly enough public parks and forests to curb pollution and support Nairobi's population of over four million people.

Nairobi has five forest remnants: Karura Forest, Ngong Road Forest Sanctuary, Ololua Forest, City Park and Arboretum. The city has seven major public parks.

These include Uhuru Park, Central Park, Jeevanjee Gardens, Uhuru Gardens, Jamhuri Park, Kamukunji Grounds and Michuki Memorial Park. The distribution of these spaces reveals striking inequalities in terms of location and maintenance. The few that exist are mostly located in the outskirts of the city or in the central business district. Hence they require some form of motorised transport to get to, creating an access barrier for those who cannot afford the commute or the entrance fee, in the case of spaces that charge. They are also maintained to different levels, with some offering safe spaces while others are crime spots. Public neighbourhood or community parks in residential areas hardly exist.

Karura Forest stands out as one of Nairobi's most popular attractions and receives over 40,000 visitors a month. It is an urban dry forest in the outskirts which covers an area of 1,041 hectares.

Karura Forest has established itself as a model green public space managed by a community forest association and the Kenya Forest Service, with the support of corporate sponsors. Kenyans owe a huge debt of gratitude to the late Professor Wangari Maathai, an environmentalist, politician and 2004 Nobel Peace Prize Laureate who fought hard to save Karura Forest from land grabbers and led a sustained campaign for its preservation and rehabilitation.

The number of visitors to Karura Forest and other parks soared during the pandemic as city residents desired to commune with nature and unwind. People also discovered the therapeutic effects of these spaces to coping with the stressfulness of the pandemic. During the pandemic people experienced the direct link between green spaces and their health. They also began to pay attention to the sorry state of some of the city's public spaces or the untapped potential. Others noticed the absence of nature in parts of the city. It is noteworthy that there are no public parks east of Nairobi

where majority of the urban sprawl is located. Very few homes in this part of the city have private gardens unlike those located in the affluent suburbs neighbouring Karura Forest.

The Government of Kenya has initiated a number of environmental conservation projects in Nairobi to promote urban greening and improve the quality of life of its citizens during the pandemic.

Hopefully, other African cities have also come to appreciate green spaces as an urban asset and will implement urban renewal strategies aimed at achieving harmony between the built environment and nature. Cities can reap enormous benefits from green spaces, ranging from environmental rewards to health benefits for the population. Parks, forests and other open recreational areas can also create employment opportunities especially for the urban poor.

City planners and policymakers should therefore allocate more public green spaces and bridge the inequality gap. These spaces should be spread throughout the city, including in low-income areas where residents are unlikely to have any greenery. As far as possible, they should be located within reasonable walking distance of residential areas to make them easily accessible. In addition, they ought to be sufficiently resourced so that they are accessible to the public at no charge. They should also be safe social spaces that are designed to promote relaxation and outdoor activities. City by-laws should also compel property developers to plant trees and include green patches in all residential developments.

Urban residents should also play their part in creating a green urban environment. They can provide financial or in-kind support to maintain green spaces and protect them from depletion, vandalism and encroachment. They can also increase the vegetation cover in their residences and participate in community tree planting initiatives.

There should also be widespread civic education on the value of green spaces so that the creation of green cities becomes a joint effort between all the city's stakeholders.

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Mining

South Africa’s Mining Sector: Delivers Excellent Financial Performance.

S

outh Africa’s mining sector delivered a solid financial performance for the 20202021 financial years with value delivered to all stakeholders despite the current challenging pandemic environment.

to shareholders and more than a tripling in taxes paid.

The excellent financial performance resulted in mining companies being in a very strong financial position, with record distributions

These are some of the highlights from PwC’s 13th edition SA Mine, a series of publications that highlights trends in the South African mining

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Debt has largely been repaid and returns to shareholders reached record rand levels for many companies.

Andries Rossouw, PwC Africa Energy Utilities & Resources Leader, says: “The growth in SA’s mining industry confirms the resilient nature of the sector and the opportunities that exist in rebuilding the South African economy. With record rand prices for gold, the platinum group metals basket, iron ore and more recently, coal, it was no surprise that the industry’s financial performance exceeded expectations on most fronts.

“The COVID-19 pandemic has also added momentum to the already in focus importance of the environmental, social and governance (ESG) agendas across all industries in South Africa. Multiple stakeholders are increasingly challenging mining companies to make changes to their boardroom agendas on ESG. There is widespread recognition in the industry that for South Africa to achieve its net zero targets, ESG must be a core component of any mining company’s strategy and policies.”

Market capitalization

High prices can only be utilized if you can deliver into them and the SA mining industry did well to recover production levels to be at or above 2019 levels.

The average EBITDA margin of the mining companies included in this analysis was 46% compared to 27% in the prior year. At these margins mining companies are faced with interesting capital allocation decisions. Maintaining discipline and following through on long term strategies remain key.

The aggregate tax expense for the mining companies was R91billion with an effective tax rate of 27%.

This represents a staggering 250% increase from the previous period and was driven by the increased profitability of the mining sector.

Taxes paid increased by 258%. The increase in revenue also resulted in royalty taxes of R21 billion being paid in the current year. This represents a 146% increase from the prior year.

Total market capitalization increased in the current year to R1,470 billion from R1,047 billion. This total is a R423 million (408%) year-on-year (YOY) increase from 2020, mainly attributable to the increase in market capitalization of companies within the PGMs sectors.

Net profit grew to R274 billion, which represents a 285% increase, because of the increased commodity prices and improved production after mines largely returned to preCOVID-19 production levels.

Financial performance

The current period saw production increase by 6% YOY. Although the overall production for the year to June was still marginally below 2019, monthly production levels over the last 6 months were above the 2019 levels.

For the companies in our analysis revenue in rand terms grew by 63%.

This was mainly driven by higher prices for PGMs and iron ore.

The mining sector was one of the most resilient sectors, emerging strongly despite COVID-19 restrictions to deliver record financial results. In line with the prior year, the PGM basket generated the largest portion of revenue.

As global supply and demand jostled to find their way back to pre-pandemic levels, demand and therefore prices were the outright winner. With record rand prices for gold, the platinum group metals

Mining

basket, iron ore and more recently, coal, it was no surprise that the industry’s financial performance exceeded expectations on most fronts.

Production

Manganese ore was the largest positive contributor with an average of 20% increase in output as operations recovered from an extended shutdown in response to COVID-19 restrictions and market conditions. Diamond production grew the largest by 30%.. Coal has seen the biggest drop in production from the prior year at an average of 6%.

“

The growth in SA’s mining industry confirms the resilient nature of the sector and the opportunities that exist in rebuilding the South African economy. With record rand prices for gold, the platinum group metals basket, iron ore and more recently, coal, it was no surprise that the industry’s financial performance exceeded expectations on most fronts.

“

industry released today.

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Mining

The mining industry’s role in transitioning to a cleaner economy As South Africa navigates its way through its transition to a cleaner economy, there are several factors to consider. The transition comes with employment opportunities in cleaner energy industries, such as renewable energy and battery storage. It is key that these opportunities are maximized to the fullest to generate economic growth and employment opportunities for all. We need to skill and reskill employees for this transition.

The just transition concept has put a lot of focus on the plight of communities in the coal mining areas. In a country with record unemployment and where the socio-economic challenges probably post the biggest risk, not only for the mining sector, but for the country as a whole this focus might be too narrow. We believe the socio-economic challenges need to be addressed on an integrated basis.

The limitations of supply of key commodities required for the total green energy value chain are likely to limit the pace of the energy transition to the extent that a realistic transition will result in most of the existing coal mines closing on their normal life of mine planned times. In fact, in the next decade, the country stands to lose more jobs in the gold sector for planned mine closures than in the coal sector.

The mining industry is well positioned to use the global energy transition opportunity to enable growth in SA. This includes the opportunity for research and development (R&D) and industries to support the renewable energy industry in general and the green hydrogen economy.

Transforming the workforce for smart mining The mining workforce — from a job role, digital skills, and behavior perspective — is evolving continuously. In a recent PwC survey of digital transformation in

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the South African mining sector, most respondents believed that there will be a change in the nature of the workforce to more skilled employees over the next five years.

As major mining organisations think about their strategy and transformation journey from a digital and mining operations automation perspective, it is critical to understand, identify and start developing skills to support and undertake this transformation. The report identifies some of these roles, skills, and competencies.

Marcia Mokone, Partner in PwC’s Mining Division adds: “In order to prepare the workforce for future roles and to up-skill employees with the skills and competencies they need to stay relevant, up-skilling and learning and development within mines needs to be carefully rethought with rapid technology adoption in mind. Mining companies have a unique opportunity to manage digital transformation proactively and to minimize the potential

Mining

negative impact on the workforce and operations through upskilling and reskilling.”

Although digitized training has a number of benefits, in the South African mining context there are some challenges that need to be considered: language barriers and literacy levels; workforce age groups, generational expectation differences, and cultural norms; physical infrastructure, and asset development and operating costs; and scalability, adaptability and accessibility of training.

Mokone comments further: “As mining organizations think about new ways of learning, they will need to put plans in place to future-proof their workforces in order to address these factors and, more importantly, the realities of diverse workforce generations, cultures and literacy levels.”

ESG enters the mining mainstream

“

“In order to prepare the workforce for future roles and to up-skill employees with the skills and competencies they need to stay relevant, up-skilling and learning and development within mines needs to be carefully rethought with rapid technology adoption in mind.

We are seeing many large mining companies protecting their investments by diverting investments away from coal towards investments that are likely to support the net zero agenda. Shareholders and other stakeholder scrutiny are turning up the heat on how mining companies operate – this is becoming a real concern for the industry.

There is widespread recognition in the industry that for South Africa to achieve its net zero ambitions, ESG must be a core component of any mining company’s strategy and policies.

Mining companies have often been criticized for not doing ‘enough’ on ESG and consequently are increasingly challenged to make changes to their boardrooms.

“While the transition might present challenges, it also presents substantial opportunities for mining companies to create

shared value and economic benefits for the communities in which they operate,” Mokone says.

Infrastructure There is an obvious need to invest in the right skills, infrastructure, energy, and water and, in general, creating an enabling environment for exploration, mine development and production. Realizing the full potential benefit of our resources and creating long-term sustainable outcomes will depend on our ability to mine cost competitively and to integrate various value chains profitably.

Share of value added The 2020–2021 year has been rewarding for mining industry stakeholders. There have been record distributions to shareholders. As reported in company value added statements, employees continue to take a major share of value added (20%) and government increasing its share through direct taxes (14%), employee taxes (3%) as well as royalties (5%). What was evident this year is that growing the pie is a much more successful way to share value with stakeholders than trying to increase stakeholder share from a shrinking pie.

Mining companies for the first time in a number of years were able to retain value created. This strong financial position and available cash resources leaves mining companies with interesting capital allocation decisions.

Strategies will include expansions and new development, acquisitions, strengthening of local infrastructure and host communities, market development and investments up and down the value chain.

Execution on these strategies will require disciplined long-term sustainable mind sets.

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“

Lifestyle

Not ordinary, extraordinary.

Isabella Perazzoli: Co-founder and CEO, Only4U

Only4U, is an innovating DMC of observers, catalysts and multipliers of business and tourist activities.

Cooperating with private and public administration, we aim at Territory development, through quality tourism and the creation of a network among the different actors of the territory.

AEI had a conversation with the CEO, who had a lot to share AEI seeks to have an overview of Only4U, one of Italy’s largest hospitality service providers, could you share insights?

Only4U is a Destination Management Company and it works as a developer of opportunities for small and large territories to make them prestigious destinations. The aim is to directly involve the local economic Producers, places, people and carrying out specific service projects. Only4U is also a Tour Operator focusing on creating special experiences to the benefit of its customers to allow them the discovery of hidden places across Italy trough food & beverage products, their History and Culture, their design. Only4U trade also

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primary well known destinations (Milan, Venice, Florence, Rome, Naples, Sicily), and focus his offer on proposing unique experiences to the tourists visiting these famous places.

Only4U is to be the preferred choice and the most trusted and respected tourism, luxury and hospitality service provider in Italy, What is your value proposition, what are your competitive advantages?

Only4u works in direct connection

Lifestyle

How would you evaluate the progress made by the Company over the last decade?

The Company was born in October 2017. We started as a little group of friends with the Idea to apply a different business model to the Tourism market (my back ground is in Drilling Water and Oil &Gas activities) The business start to be developed in 2019, but at the begging of 2020 Covid 19 stopped all the activities and we decided to work hard on the project and we did the onboarding of new 17 people.

Only4U has partially started with the activity only during the last summer.

It is bad to say that Covid has allowed the Only4u Management team to think about the project and all the possible opportunities/goals, giving to the project a good engine to be a special and Innovative Italian Destination Management Company.

You recently signed AEI’s Director of Business Operations, Arvy Nahar as Brand Ambassador for the Company, what attracted you to Her?

“

There is an industrial reality, in the province of Piacenza, which, in the symbolic year of the economic rebirth after the pandemic, celebrates a century of life, writing the new chapter of an extraordinary story.

Isabella Perazzoli today is at the helm of the rebirth of LP Drilling, a company from Cortemaggiore with an international dimension, which after recent years of corporate vicissitudes, has returned firmly to the hands of an all-Italian property in the very year of its centenary.

“

with the producers of each territory and the best Assets of these areas.

For this reason Only4U has created a special condition to propose the best solution for its clients. After 4 years mapping the Italian territory Only4U is now able to create special combinations and offers.

Our partners are in every location we selected in Italy. Just to give you an example thanks to this we are the Tour Operator partner of Mc Arthur Glen Designer Outlets (luxury outlets in Italy and Europe), Lonely Planet (European leading media & publishing group focusing on travel guides), Historical Italian Buildings Association (A.D.S.I. Associazione Dimore Storiche Italiane), and we’ve generated a special Brand “Autentico Store” to buy and sell selected Food & Beverage Products that represent the best of each Territory we deal with in Italy. The flag ship store we opened is in Milan and the next one will open on March 8th 2022 in Olomuc Mall, a luxury shopping center in Central Europe (Czech Republic). Through our selected Product we sell the Place where the product come from, a visit and/or a stay at the Producer’s premises, and the best experiences in the surrounding area (i.e. from a wine bottle we build & sell a 5 days wine tour across Sicily or Tuscany to visit the most famous wine makers and the surrounding beauties).

She is like me, a true person driven by genuine values. She does all with passion and she created a very www.africaenergyandinfrastructure.com | 57

Lifestyle

important connection thanks to that with a lot of VIP person from many different geographies. From the first time I met her I had the impression to know her since ever.

Excluding being the founder of Only4U , you are a lead Executive at LP Drilling, provide us with a summary on the company history and it’s services .

LP Drilling is an Italian company providing Oil Corporates with onshore drilling and workover services as well as mining abandonment services.

It was born as a spin-off of Perazzoli Bros. our family business since 1922. At the very beginning we were only in water wells drilling, water elevation and maintenance.

In 1989 LP Drilling has started to work in the hydrocarbon industry - Oil & Gas mining abandon & workover for ENI in Italy central Apennines and Po Valley.

In 2007 the Oil & Gas business were spin off from the Water business and two dedicated companies were created. Between 2007 and 2014 3 different equity partners supported the business development of our company.

The last partner, in 2014, was MND AG (KKCG Group – Czech Rep.), an international Oil & Gas Exploration & Production company that led our business development in Central Europe mainly.

At the end of 2020, we as Perazzoli’s family decides to run a vertical integration of the business.

A new Industrial Plan was approved. It was aimed on merging oil & gas drilling services with geothermal and water drilling and elevation services.

The new plan brought to a change in the shareholding structure. We did the buyback of 100% of the equity from our foreign partners and today only Italian capital is involved since January 2021.

Our strategy now is to recover a presence in the Mediterranean Countries including the close northern African geographies, to consolidate our presence in Italy focusing to geothermal projects to face the energy transition plan just approved by our Mr. Draghi Gov. and develop the water segment for the future in both Italy and EMEA

regions exploiting our oil & gas equipment and competencies to offer performance (faster drilling combined with top standard of safety to the benefit of our workers and of the surrounding environment).

What is your background in the Petroleum Industry?

I started to work as a CFO, but since the begging I understood that all, also operations on rig location, were very important for me to better manage costs and revenues of the company. For this reason I decided to spend lot of my time at rig locations to better understand dynamics and issues of this work.

Not an easy experience but thanks to this I learned a lot about operations, equipments lifecycle and service level provision of both Oil & Gas and Water activities.

Today I can be Chairman and CEO of LPD Company with a deep knowledge on this field, and with full respect from all my employees including those spending their life at well location around the world. We can now have direct communication in case of need, they know I am fully aligned with them and vice versa.

How has Technology helped reduce the effects of drilling for and producing oil?

LP Drilling “has an average turnover between 9 and 12 million euros today, it works to create synergies in the energy transition and to address foreign markets, which are already responding with interest”. “our company has already been classified in Israel as one of the 40 companies in the World able to participate in drilling programs for water research. A certificate that fills us with satisfaction and shows that we have finally taken the right path ” Transition to cleaner energy from fossil fuels, kindly share the company’s energy transition plans currently in place“In 2016, in order to stabilize revenues and face a market that is moving towards a green energy transition.

I decided, as a director, to propose to my shareholders an industrial plan capable of turning the company around. The idea is to go back to the origins: to reunite

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the family company, which had continued to manage water drilling independently, with the Oil & Gas branch which ended up in LP Drilling. An energy transition plan aimed at well drilling technologies for the extraction of water, the oil of the future”.

You were quoted as saying that, ‘’LP Drilling has a turnover between 9 and 12 million euros, works to create synergies in the energy transition and to address foreign markets, which are already responding with interest, in addition to being classified in Israel as one of the 40 companies in the world able to participate in drilling programs for water research’’, could you elaborate on the above statement?

There is an industrial reality, in the province of Piacenza, which, in the symbolic year of the economic rebirth after the pandemic, celebrates a century of life, writing the new chapter of an extraordinary story. Isabella Perazzoli today is at the helm of the rebirth of LP Drilling, a company from Cortemaggiore with an international dimension which, after recent years of corporate vicissitudes, has returned firmly to the hands of an all-Italian property in the very year of its centenary.

President and CEO, Isabella Perazzoli is the heir to an industrial and family saga that was born in 1921 as F.lli Perazzoli, passing through the identity of Perazzoli Drilling to conclude its identity path with the name of LP Drilling.

Isabella, above all, is the proponent of that wing stroke that led to the decisive investment of over two million euros to increase the reserves of share capital and create the basis of the growth strategy implementation.

Thus LP Drlling is now in full revival in the elite of drilling, in the water and Oil & Gas sectors, passing through applications in the field of geothermal energy.

With over 100 employees, an average turnover of between 9 and 12 million euros, LP Drilling represents a vanguard for the energy transition and in Israel is ranked as one of the 40 companies worldwide able to access the state programs of drilling for water research.

INTERVIEW

Power

The Politics Of Eligible Customer In The Power Sector

T

he rigmarole of policies in the Nigerian Power Sector now signals a time for caution and reflection prior to taking the next bold step, especially as a new Minister of Power takes the saddle in the nation's critical economic sector.

A reflection down memory lane brings to bare the many pitfalls that could have been avoided but was hurriedly fallen into in the past. For instance, many stakeholders agree that the declaration of the transitional electricity market (TEM) in February 2015 was too ambitious and premature; what should have been was a phased transition into TEM or at the minimum a testing of the market prior to full declaration of TEM. The errors of such declaration has continued to plague the Power Sector with a heightened liquidity crisis in 2016 and 2017, that saw a drastic decline of the revenue flows in the

power sector, DISCOS remittance went from 70% to a sharp decline averaging about 28% - 30% for that period. The conditions precedent were not all attained, when the NERC declared TEM and allowed trading to commence; it is the reason why we have sounded the alarm on the intentions of the regulator to declare the medium term electricity market.

We have yet found ourselves at a critical phase in the Power Sector where certain decisions need to be reviewed, or better yet, the entire power sector needs to be reviewed. One of such policy is the Eligible Customer (EC) Policy which was declared in 2017 by the former Minister of Power, Works and Housing (Barr.

Babatunde Fashola). In a bid to improve market liquidity, the then Minster (Barr. Babatunde Fashola), had on May 15, 2017, declared

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eligible customers in the Nigerian Electricity Supply Industry (NESI). This declaration permits electricity customers to buy power directly from the GenCos or trading licensee other than the DisCos, in line with the Section 27 of the Electric Power Sector Reform Act 2005.

The Nigerian Electricity Regulatory Commission (NERC) on 7th November, 2017 released the Eligible Customer Regulations 2017 and outlined the terms that would guide the direct purchase of electricity by end-users from GenCos and or a Trading Licensee. The primary focus of the EC Regulation is to create a framework for the utilization of excess capacity over and above the contracted portfolio of the Nigerian Bulk Electricity Trading Plc. (NBET) for economic benefit of the NESI. Thus, allowing generation companies

Power

with uncontracted capacity to access unserved and underserved customers which will improve the financial liquidity and viability of the electricity industry. The liquidity challenge in the sector must be reviewed from all angles and the best solution put forward to develop the NESI, it is important that no segment of the value chain is left at a disadvantage.

A centralized collection of the financial flow of the sector is critical, we had envisaged that with the track record of the 701.9Billion successfully implemented by the NBET, the agency would have been the first option in managing eligible customers and also international customers. NBET had published in details the disbursement of the 701.9 Billion without any discrepancy, and so best suited to manage inflows and outflows of monies in the sector. As a consumer, I am very concerned about the high cost of electricity, as I am fully aware that the cost of power can be reduced or stabilized at a best rate when the national pool is effectively managed and administered. We must ensure that the national pool price is set at a prudent cost of power.

The past four years of implementing the EC regulation has further exacerbated issues in the NESI rather than provide solutions, not only has the implementation been lopsided, it has also led to high cost of power to residential users.

We have seen the average cost of power rise from N16 in 2015 to N29 in 2021 due to multiple factors including the EC implementation.

To put it in context, the NBET is responsible for managing the national pool of grid distributed electricity, it receives electricity from all the GENCOS (contracted via its Power Purchase Agreement and Interim Sale Agreement) into a pool, which when aggregated gives the weighted average cost of power that flows into the Multi Year Tarrif Order (MYTO) by the NERC. The NERC as the sector regulator ensures fairness in the sector and regulates practices consistent with the provisions of the EPSRA. However it seems the NESI has become very distracted from its mantra of ensuring access to affordable and quality power

for consumers because with the implementation of the EC that saw many of the cheapest generators of power (Hydro) exiting the national pool and pursuing direct bilateral contract with large demand customers has led to increased financial burden on the grid and high cost of power for residential customer. Recall that GENCOS are only allowed to sell excess capacity outside of the contractual capacity with NBET, however that has not been the case. Suffice it to say that at this point we do no not have the validated capacity claims of the GENCOS, as the entire system is yet to be subjected to a mandatory synchronized capacity test in the country. Also, we have heard claims by the TCN of its ability to wheel out about 7,000Mw of power, this claim is also yet to be tested and validated. How can this even be, when in 2021 alone we have experienced at-least two grid collapses? The misalignment in infrastructure in the sector must be effectively addressed, let us have valid, real time and tested data across the value chain.

The role of the new Minister of Power, Mr. Abubakar Aliyu is well cut out already, there is need to increase sanity in the sector especially with the multiple conflicting policies. The Minister must ensure all conditions precedent are effectively put in place prior to implementing the EC policy or any other policy at all. As a matter of importance, we must validate claims of excess capacity by the generating companies and the TCN. A sector wide audit of infrastructure and capabilities must be put in place, we have to move away from making careless claims and counter-claims via the media aimed at misleading policy makers for self-serving purposes to a state of factual evidence. The market has stayed too long in the transitional phase, nonetheless it is premature to talk about the Medium Term Market at this time or the activation of contracts.

The Federal Government has continued to pick of the slack for the burgeoning debt in the sector causing it trillions of naira in intervention, infact at some point the Central Bank of Nigeria had to step in with the creation of private

credit loan arrangement to the DISCOS via Meristem Nigeria Limited. The DISCOS now access top-up loan from Meristerm at a charge, for which they use in making up the payments to NBET in compliance with the Minimum Remittance Order issued by NERC. The functions of Meristerm in the NESI is yet to be understood as its transactions is shielded away from the public eye, what we know for now is that the CBN loan is routed via Meristerm (a private company) and in turn Meristerm earns commission for administering the loan. Is Meristerm taking up the functions of a commercial bank in the Sector? Or is Meristerm another credit guarantee as the NBET but in this case is being paid proportional to the loan it administers? The New Minister of Power will need to review the functions of Meristerm in line with the EPSRA, and assess its benefits to the system and long-term sustainability of the NESI. There are multiple issues to be addressed by the new Minister of Power, however my candid advise is that the Minister takes his time to understand the various policies that are being pushed forward by different parties and see through their intentions. We must not make the same mistake of 2015 and 2017 simultaneously. Although it's a race against time, nonetheless the electricity market is not ready for any uncalculated risk nor can it take any further policy summersault.

The Nigerian electricity market is a rules-based market where market participants are expected to engage with each other, based on a defined set of rules. The Honourable Minister may please ensure that these rules which were crafted in the wisdom of the experts that envisioned a viable electricity market is hereby adhered to and not administered flippantly for the advantage of a few.

Abdullahi Umar is the Managing Director/CEO, Target Energy Ltd, a power sector consultancy services company. Umar is power sector analysts and writes from Abuja, Nigeria.

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Power

EAST AFRICA IN VIEW: A PROFILE

DR. MACHARIA IRUNGU, Managing Director, Kenya Pipeline Company (KPC)

D

r. Macharia Irungu is the Kenya Pipeline Company (KPC) Managing Director. He has over 30 years of experience at Senior Management level in Lubrication, Retail, Real

estate, and Supply Trading in the petroleum sector in Kenya and Africa. Dr Macharia holds a Doctor of Philosophy in Strategic Management from the University of Nairobi and a Master of Business

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Management Degree from Newport University (USA).

Dr. Macharia joined the company at the wake of the unprecedented COVID-19 pandemic. Despite

During his short tenure KPC’s business performance has scaled to great heights. The Company has provisionally recorded Kshs.

7.6 billion in 2020/21FY which translates to 31% growth of Pre-Tax Profit (PTP) from Kshs. 5.8 billion in 2019/20FY. With respect to the refined petroleum products transported through the pipeline, the Company recorded a growth of 6% to 8,111,539 m3 in FY 2020/2021 above the previous year’s performance of 7,686,427 m3 . The improved performance is largely attributed to enhanced corporate service delivery and streamlined systems and processes.

With respect to support to the National Development Agenda the Company as in the previous two years remitted dividends worth $145 million to the exchequer.

Part of this went into supporting rehabilitation of NairobiNanyuki Meter Gauge Railway and rehabilitation of Naivasha –Kisumu Meter Gauge Railways lines the objective being to spur socioeconomic development in the Mt. Kenya and Northern regions In addition, KPC committed resources towards the transformation of Kisumu Port into a regional transport hub contributing to the creation of a blue economy. A collaborative effort between Kenya Ports Authority (KPA) and KRC resulted in a rejuvenated Kisumu Port, including the resumption of maritime transport of fuel through rail loading facilities at our Kisumu Depot. We remain committed to regional expansion through Lake Victoria as a more cost effective and safer option of fuel transportation.

Power

Dr. Macharia is a member of the America Chamber of Commerce, Kenya Hospital Association, British Business Association, Institute of Directors and the Kenya Institute of Management. He is also an associate of the Institute of Chartered Accountants (England and Wales), Institute of Certified Secretaries (Kenya) and Institute of Certified Public Accountants of Kenya.

Additionally, Dr. Macharia has held various positions of leadership. To highlight a few, he was the Group Managing Director at Gulf Africa Petroleum Corporation(GAPCO), Director at Total Kenya Plc and Director of Libya Investment Petroleum, Mobil. He has also served in various Boards including; Energy and Petroleum Regulatory Authority (EPRA), Kenya Railways Corporation (KRC), British American Tobacco Kenya Ltd (BAT), Petroleum Institute of East Africa (PIEA) among others.

Some of his distinguished accomplishments include being part of the lead team that steered of the construction of Standard Gauge Railway (SGR) in Kenya and operationalization of the Rift Valley Railways in Kenya as the Chair of the Project Committee.

Designing and implementing construction of Oil and Gas strategic storage facilities in the Great Lakes Region which has enhanced supply of Oil and Gas in East and Central Africa among other projects. He has also been very instrumental in regulating the importation, refining, exportation, transportation, storage and sale of petroleum and petroleum products as a Director at the Energy & Petroleum Regulatory Authority.

Due to his assiduousness, achievements, and relentless determination to achieve nothing but the best, he has garnered several awards and recognition globally. His awards include the Mobil International Golden Nugget and Global Recognition award, given by Exxon Mobil.

He was recently recognized with Presidential awards of the Moran of the Order of the Burning Spear (MBS) and Uzalendo Award.

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He has over 30 years of experience at Senior Management level in Lubrication, Retail, Real estate, and Supply Trading in the petroleum sector in Kenya and Africa. Dr Macharia holds a Doctor of Philosophy in Strategic Management from the University of Nairobi and a Master of Business Management Degree from Newport University (USA). Dr. Macharia joined the company at the wake of the unprecedented COVID-19 pandemic.

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this, he spearheaded a multiagency team including Public and private sectors in executing unrivaled initiatives geared towards containing spread of the andemic in the Country. These initiatives entailed; coordination of production and free distribution of over 1,500,000 litres of hand sanitizers to vulnerable Kenyans across the country and; Donation of approximately $ 550,000 to the National Youth Service (NYS) for production of 1,500,0000 protective face masks. These initiatives strengthened the country’s response to this global pandemic.

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Aviation

PanAfrican Open Skies Agreement Struggles To Get Traction

By Andrew Curran

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34 of Africa’s 54 countries have signed up to SAATM since 2018.

Photo: Airports Company South Africa Single African Air Transport Market a work in progress Twenty-two years later, there remains a way to go. One of the more recent outcomes was the Single African Air Transport Market (SAATM), a harmonized regulatory framework providing a unified air transport market in Africa.

SAATM also remains a work in progress since its launch in early 2018. According to the International Air Transport Association (IATA), 34 of Africa’s 54 countries have signed up to SAATM. Nonetheless, the framework remains a flagship project of the African Union Agenda 2063 – a set of African Union initiatives to progress Africa’s development.

SAATM has four main goals. Firstly, to lift market access restrictions for airlines from signatory countries.

Second, remove restrictions on airline ownership. Third, grant extended air traffic rights such as fifth freedom rights. Fourth, open up flight frequency and passenger capacity limits. Importantly, SAATM would see safety and security rules harmonized in line with ICAO standards.

“The SAATM has the potential for remarkable transformation that will build prosperity while connecting the African continent,” said IATA’s Vice President for Africa, Raphael Kuuchi, three years ago. “Every open air service arrangement has boosted traffic, lifted economies, and created jobs. And we expect no less in Africa.”

IATA’s man in Africa says that if just 12 key African countries opened their

Aviation

markets and increased connectivity, an extra 155,000 jobs and US$1.3 billion in annual GDP would be created in those countries.

Before COVID-19 struck, IATA also forecasted 5.95% annual growth in African aviation over the next two decades. Passenger numbers are expected to increase from 100 million to more than 300 million by 2026.

SAATM is sold as the kickstart Africa’s aviation industry needs.

Photo: Getty Images Over one-third of Africa yet to sign up to SAATM Back in 2018, the Africa Union wanted to have all of Africa’s 54 countries onboard by the end of this year. With three months to go, that target looks unachievable. Further, by the end of 2020, only 18 of the countries signed up to SAATM had modified their bilateral air services agreement accordingly.

You could blame COVID-19 and the destruction it wrought on the aviation industry, but there is a strong argument that destruction would incentivize slow-to-move countries to get onboard.

Even before COVID-19, the world’s second-biggest continent and home to an estimated 1.3 billion people was a troublesome environment for airlines to fly in. OAG data says there were 9,666,556 airline seats available across Africa in September or 2.8% of the global total. In February 2020, just before the global travel downturn, the figure was 3.0% Before the pandemic, the continent was long characterized by sparse connectivity, and this remains the case. Most of Africa’s airlines were losing money before COVID-19 and didn’t have the financial ballast to ride out the crisis successfully. Now, as the vaccination rollout continues and aviation starts to reboot elsewhere, Africa’s airlines are mostly out of money.

But these factors all support the case for signing up to SAATM – anything that helps reboot African aviation has to be a good thing, right?

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Before the pandemic, the continent was long characterized by sparse connectivity, and this remains the case. Most of Africa’s airlines were losing money before COVID-19 and didn’t have the financial ballast to ride out the crisis successfully. Now, as the vaccination rollout continues and aviation starts to reboot elsewhere, Africa’s airlines are mostly out of money.

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I

n November 1999, a group of African aviation movers and shakers met in Côte d’Ivoire to thrash out an agreement on integrating commercial aviation across Africa. The outcome was the Yamoussoukro Decision, a document supporting the liberalization of commercial aviation in Africa.

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Aviation

Not everyone in Africa loves SAATM While there’s a general consensus that SAATM will lead to cheaper flights, greater passenger volumes, and economic benefits, there are also fears the spoils will not get evenly distributed. Some smaller African airlines and smaller countries say they’ll miss out while wealthier countries like South Africa and bigger airlines like Ethiopian Airlines and Kenya Airlines get the rewards.

Industry group Airline Operators of Nigeria (AON) is an example of a stakeholder unimpressed with its own country signing up to SAATM. The industry group questions whether Nigeria is ready for a pan-Africa open skies agreement. When Nigeria signed up to SAATM, AON said they hadn’t been consulted. AON also cited a lack of “assistance” to help Nigeria’s airlines compete.

“Our position is that we are not comfortable with the decision by the Nigerian government because we cannot compete favorably with the African airlines if our skies are fully opened,’’ said AON Chairman Captain Nogie Meggison at the time.

Nigerian officials rejected the argument, a government spokesman saying; “The Nigerian airlines are not yet able to see the benefits of SAATM as their government does.”

Protectionism, high airport charges, taxes, and some less than stellar management from governments, their agencies, and various airlines all lead to the argument that SAATM will not guarantee a level playing field.

Uganda remains one of the SAATM holdouts. When declining to sign, Ugandan president Yoweri Musevini said he thought Africa’s dominant airlines would become even stronger as a result of the

agreement. He said he wanted to see countries like Uganda get strong regional airlines up and flying before committing to the openaccess agreement.

“Few airlines are going to dominate and that is not good,” President Musevini said.

Still plenty of people onboard

owners, governments or otherwise.

Aviation in Africa tips US$55.8 billion annually into Africa and provides 7.5 million jobs. That’s money funneled into households and supporting families. That reason alone is why SAATM needs to big push along.

Source, Bird, a story agency under Africa No Filter

The people promoting SAATM say this won’t be the case. They say the improved connectivity, increased passenger numbers, uniform regulations, and open access will benefit every airline.

One of the driving forces behind SAATM is Paul Kagame, President of Rwanda.

Rwanda has been a big player in air traffic liberalization in the last decade, and this is one reason why airline traffic in and out of Rwanda has grown so strongly. Air traffic in Rwanda is forecasted to grow 7.3% annually between now and 2038. Aviation directly contributes US$100 million annually to Rwanda’s economy and another $850 million indirectly.

Rwandan President Paul Kagame is a big supporter of SAATM. Photo: Getty Images Paul Kagame calls SAATM “a major step forward for transportation.”

In a speech made in 2018 as Chairman of the African Union, he said about the proposed open skies agreement: “Scale is essential. We must create a single continental market, integrate our infrastructure, and infuse our economies with technolog y. No country or region can manage on its own. We have to be functional, and we have to stay together.”

In the three years since, some more countries have signed up to SAATM. However, many still have not. Among those who have, regulatory changes within the various countries to meet SAATM requirements remain mostly incomplete.

Opening up Africa’s skies stands to benefit more than airlines and their

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“

Scale is essential.

We must create a single continental market, integrate our infrastructure, and infuse our economies with technology.

No country or region can manage on its own. We have to be functional, and we have to stay together. ...Paul Kagame

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Some industry stakeholders believe SAATM will benefit the big few at the expense of many others. Photo: Getty Images.

INTERVIEW Investment

AEI, Signs MOU with ASSOCHAM, to Promote Multi-lateral Investment

The virtual ceremony which was held on Tuesday, August 27th, was attended by representatives of both Organizations, taking into consideration, mutual desires of the Indian and African Parties, to deepen contacts between the business structures of both regions, which had long identified objectives of working in close partnerships, towards broadening economic ties.

In His opening remarks, ASSOCHAM’s Assistant Director – International Affairs, Mayank Sharma, identified; Infrastructure, Energy, Agriculture, & ICT as areas of economic cooperation and stimulating business activities, which could develop the continent’s economy in profound ways whilst creating jobs for India’s booming population.

Speaking on behalf of the African Leadership Group, The Managing Editor of African Leadership Magazine 9Sister publication of AEI), Mr. Kingsley Okeke, highlighted the Group’s resounding history of attracting Investments inward-Africa, and showcasing the best of the Continent’s achievement globally.

organizations, companies, and entrepreneurs of Indian and African origin in-order to promote the economic growth of both countries, collaborate for organizing; fairs, exhibitions, seminars, symposia, conferences, business meetings, business missions and other similar events’’ She concluded.

‘’I am confident about this relationship and the potentials it holds for maximum returns on the various areas of collaboration.

This partnership is an ideal way to develop greater industrial and economic activities, considering the outcome of ALM and it’s impact on the continent, over two decades’’, He concluded.

Also present at the signing ceremony, were; Meenakshi Sharma, ASSOCHAM’s Assistant Secretary General and Head – International Affairs, and Wofai Samuel, Editor of Africa Energy and Infrastructure Magazine, a sister publication of African Leadership Magazine.

The Group’s Director of Energy Operations, Arvy Nahar, reiterated her commitment to strengthening partnerships and collaborations in the Energy Sector, which is imperative for Africa’s growth and prosperity within the next decade.

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Wofai congratulated The Association of Indian Chamber for the newly formed relationship with African Leadership Magazine, stating that ,

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T

he Management of Africa Energy and Infrastructure Magazine - AEI, signed a memorandum of understanding with The Associated Chamber of Commerce & Industry of India – ASSOCHAM.

‘’The relationship between India and Africa, is key to ensuring highvalue investment opportunities, and access to key projects both within the private and public sectors’’.

INTERVIEW

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